Hong Kong needs to trim construction costs that are most expensive in Asia

Everyone knows that the tiny flat where most of us live in is worth millions of dollars. But only a few of us ever thought of how much did that actually cost to build.

According to the International Construction Cost Report of Arcadia’s Asia which was released this month, Hong Kong is the most expensive region in Asia to build, followed by Macau. The former British colony also ranks third among 43 locations in the world, falling only behind Switzerland and Denmark. But what can be done to curb construction costs in a city where buildings sprout up like mushrooms?

Experts say there’s an immediate and obvious remedy: to import workers from mainland China or elsewhere. However, it’s not enough to think in short-term. Enhancing interdepartmental coordination, speeding up construction processes and investing in innovation are other solutions that local experts think might help to cool down the market.

Chau Kwong-wing, chair professor of real estate and construction at the University of Hong Kong, said there is a need to think and plan for the long term.

“The government and the industry should invest more on research and development,” he said. “A way of decreasing costs is to improve productivity of labour, for instance, introducing machinery. We have reached a stage where we cannot rely in importing technology from outside anymore. Now we need to develop technology suitable for Hong Kong.”

Over the past few years, several people in the industry have pointed out the city’s increasing labour demands, but the idea of importing construction workers, like neighbouring Macau does, has run into strong opposition from local unions. “I totally agree that we need a regulated system to import labourers either from overseas or mainland China,” said Antony Man Chi-chuen, former chairman of the quantity surveying division at the Hong Kong Institute of Surveyors.

In his third policy address, chief executive Leung Chun-ying recognised that “the construction industry needs to import skilled workers in a timely and effective manner to meet the demand.”

The scheme that will be adopted is not yet clear, but the government stated that “allowing imported skilled workers to work across various public sector works projects can enhance the flexibility of deployment, maximise the productivity of skilled workers and control costs more effectively.”  

Construction prices are unlikely to decline in the near future, considering increasing housing demands and several other public projects planned for the coming years such as airport expansion and seven new rail projects. “Even the government doesn’t have any idea of how to stop the boom… There are too many projects at the same time, but of course, most of these projects are quite urgent,” Man noted.

Aside from importing skilled workers and also prefabricated building units, William Tseng Yen-wei, vice-president of the Hong Kong Institute of Architects, said speeding up the approval processes and shortening the construction period can make a difference.