Hong Kong SAR: Construction Outlook, March 2024

What you will learn:

• We forecast total construction work done to decline 14.1% in 2024. Work progressed faster than expected over 2023, causing the project pipeline to thin somewhat. Heightened construction costs, fiscal consolidation, and emerging signs of a global growth slowdown will limit new projects from entering the pipeline. Activity will fall across all sectors in 2024, with non-residential building and civil engineering returning to positive growth in 2025.
• We expect residential building work done to fall by 4.6% in 2024. The decline in activity will be limited by an unwinding of the backlog of unfinished projects and increased government support to address Hong Kong’s weak housing market and undersupply. However, falling house prices and persistent cost pressures will still pull down on housing construction over the short term.
• We forecast non-residential building work done to contract a substantial 21.0% in 2024, albeit from a heightened base. Heightened construction costs and a weak external environment are anticipated to soften demand in the near term. Tailwinds from the reopening of Hong Kong’s borders have begun to fade, which will particularly badly affect commercial building activity.