Building and construction to Hong Kong
(Last updated: 29 Nov 2012)
Trends and opportunities
The market
Hong Kong is a dynamic commercial and financial centre with a population of approximately 7.1 million in mid-2012. The building, construction and civil engineering sector in Hong Kong is large and competitive. Approximately half of the population live in subsidised public housing and the Hong Kong public continuously rate housing as a priority. Housing in Hong Kong is predominantly high rise apartment blocks with very few standalone houses. Both the public and private sectors carry out housing works.
Hong Kong is a regional leader in the building and construction sector, particularly known for its ability to rapidly construct high rise apartments. This capacity is predominantly attributed to specialised construction techniques, such as reclamation and design-and-build methods. Its export market is generally Asia and principally mainland China.
Variety of building and construction services
This sector is defined by three categories of construction activities:
- Building (residential, commercial and industrial/storage services)
- Structure and facilities (transport, other utilities and plant, environment and sports and recreation
- Non-site activities (decoration, maintenance and repair)
Service providers
The industry is dominated by a small number of large domestic contractors. There is also a diverse mix of foreign contractors, a considerable amount of companies that are involved in both subcontracting and developing, and high numbers of subcontractors.
There are a substantial number of large companies, able to meet the needs of complex projects that require sophisticated technology and strong financial backing. These companies operate across a number of regional markets. These large companies are often the main contractors, who then in turn subcontract to smaller companies.
The industry involves many professional service providers such as architects, surveyors and engineers that are experienced and highly skilled in building works. This is in order to meet the nature of the construction projects in demand. Due to the complexity and size of these projects, they tend to be awarded as a single package to multi-disciplinary contractors.
There is a non-discriminative industry environment between local and foreign contractors and there are no formal restrictions to entry in either the private or public sectors. However, in order to tender to the public sector, foreign contractors must have a reputable track record and sufficient financial capability.
Opportunities
The Hong Kong Government announced HK$62.3 billion as the annual actual expenditure on capital works for 2012-13. Large-scale projects include:
- the Guangzhou-Shenzhen-Hong Kong Express Rail Link
- the Hong Kong-Zhuhai-Macao Bridge, the Central-Wan Chai Bypass
- railway construction works of South Island Line (East)
- the West Island Line and Shatin to Central Link project
Integrated arts and cultural district in West Kowloon
Managed by the West Kowloon Cultural District Authority (WKCDA - www.wkcda.hk) on a spectacular site on the Hong Kong harbour front comprising of 40 hectares in West Kowloon. The project consists of an integrated arts and cultural district with a number of core arts and cultural facilities, retail, dining and entertainment facilities, communal and ancillary facilities. Venues include: a Chinese Opera House, an Art Museum, Centre for Contemporary Performance, M+, Lyric Theatre, Music Centre, and a Mega Performance Venue + Exhibition Centre.
Fully funded by the Government of Hong Kong and valued at HK$21.6 billion (around A$2.6 billion), the project is expected to be completed in phases starting from 2013 and lasting until 2026. Major contracts will be offered through international competitions and tenders on a fair and competitive basis.
The Hong Kong Government has expedited the transformation of Kowloon East (the new Kai Tak Development area, Kwun Tong and Kowloon Bay) into an attractive alternative central business district. The area of Kowloon East being developed is twice the size of Central.
The three-phase project is expected to be completed in 2021. It will feature an elevated monorail, an 11km promenade, entertainment facilities, outdoor performance areas and water-sports facilities.
Other large infrastructure projects
A 2007 policy address outlined 10 large-scale infrastructure projects, some of which have since commenced, a summary is below:
- South Island Line (SIL) linking Admiralty to the Southern District on Hong Kong
Value (A$ million): 861
Target commencement: 2011 Target completion: 2015
- The ShaTin to Central Link
Connecting the northeast New Territories and Hong Kong Island
Value (A$ million): 5,811
Target commencement: 2012 Target completion: 2018/2020
- The Tuen Mun Western Bypass and Tuen Mun Chek Lap Kok Link
Linking up Deep Bay in Shenzhen, the northwest New Territories and Hong Kong International Airport
Value (A$ million): Over 2,323
Target commencement: 2010 Target completion: 2016
- The Guangzhou-Shenzhen-Hong Kong Express Rail Link
Linking up the national rail network of the Chinese Mainland and connecting West Kowloon to Shibi and Guangzhou
Value (A$ million): 6,398
Target commencement: 2010 Target completion: 2015
- Hong Kong-Zhuhai-Macau Bridge
The 29.6km bridge with six lanes and linking up Hong Kong, Zhuhai and Macau
Value (A$ million): Over 5,027
Target commencement: 2011 Target completion: 2016 or later
- Hong Kong-Shenzhen Airport Cooperation
A dedicated rail between Shenzhen Airport and Hong Kong International Airport
Value and target information not available.
- Hong Kong-Shenzhen Joint Development of the Lok Ma Chau Loop
Lok Ma Chau Loop, an area near the Hong Kong-Shenzhen border. Working with Shenzhen authorities to develop the area.
Value and target information not available.
- West Kowloon Cultural District (WKCD)
WKCD, occupying about 40 hectares of land, is the flagship art and culture development in Hong Kong, which aims to provide a platform to enhance arts education and cultural exchange and cooperation.
Value (A$ million): Over 2,573
- Kai Tak Development Plan
An area consisting of former Hong Kong airport and its adjoining parts. To be developed into an area for commercial, residential, recreational, tourism and community users together with support infrastructure. The development is divided into three phases:
- Phase A: A cruise terminal (first berth), public housing (13,000 units), government offices, community facilities, a waterfront promenade and supporting infrastructure.
- Phase B: Second berth of cruise terminal, residential and commercial buildings, roads and rail-links to other areas, underground streets and other supporting facilities
- Phase C: A stadium, residential and commercial development, a park, transport links and other supporting infrastructure
Value (A$ million): Over 14,867
Target commencement: 2009
Target completion: 2013/2016/2021 (in 3 phases)
- New Development Areas (NDAs)
Purposes of land use include housing, employment, high value-added and non-polluting industries.
Target completion: 2019 (in first phase).
(Source: various press and government sources)
New development areas
In February 2001, a Practice Note entitled 'Green and Innovative Building' was issued, which outlined government incentives for environmentally-friendly buildings. The development of intelligent buildings provides opportunities for Hong Kong’s builders to utilise advanced technologies in construction.
The best opportunities exist in the supply of building materials and equipment, and providing specialised construction and building services. Areas where Australia has particular capability and suitability for the Hong Kong building and construction sector are listed below.
Building and construction services:
- Architectural services
- Landscape architect
- Contractors
- Civil engineering
Building materials and products:
- Building and formwork systems
- Medium density fibreboard
- Paints and coating
- Fire protection products
- Steel and aluminium products
- Intelligent building systems
- Plasterboard and insulated panels
- High-end sanitary ware
- Up market kitchen cabinets
- Interior fit out products
- Good quality ceramic sinks and baths
- Electrical installation equipment and accessories
- Lighting equipment and installation
- Professional entertainment event and venue technology
- Marble, sandstone and limestone
Green building services:
- Architectural design services
- Environmental engineering services
- Indoor air quality assessment
- Building efficiency assessment
Green building products:
- Green building architectural design
- Environmental engineering services
- Indoor air quality assessment
- Building efficiency assessment
- Building materials with low VOC emissions
- Furnishings
- Renewable energy technologies
- Recycled building products
- Energy and water efficiency and management technologies
- Monitoring systems
- Energy-efficient heating, ventilation and air-conditioning
- Green roof and green wall technologies
- Renewable-energy lighting such as hybrid street lamp
- Structural fabrics with a high thermal performance, such as e-glass to reflect sunlight
Competitive environment
As an open market and because of Hong Kong's access to the Chinese market, competition in the building and construction sector is keen, but not forbidding. It is highly competitive with equipment and materials available from Europe, USA and Asia.
Similar time zones and its close geographic location enhance Australian companies' ability to supply products and services more easily and speedily than other overseas counterparts.
Tariffs, regulations and customs
Hong Kong is a free port and there are no barriers to market entry. Materials and equipment can enter freely but service providers face high costs in establishing a presence in the market. Contractors must also obtain government accreditation to bid for public projects.
There is an increasing emphasis being placed on international standards and companies that have obtained ISO 9000/9002 endorsement will have a marketing edge, particularly for public projects.
Industry standards
British standards (BS) are traditionally specified for most major and public works projects. While Australian products that meet Australian standards would normally also meet BS, there must be a notice of compliance that the product meets BS as well. This usually involves retesting by an approved BS testing authority.
Marketing your products and services
Market entry
Entry into the building and construction sector in Hong Kong is requires the ability to compete with other companies on an international level. To penetrate the market you must be able to compete on price and delivery with large and small companies from almost every country.
Many buyers in the building industry are affiliated with major developers so therefore are linked to projects undertaken by those developers. Many developers have opened up subsidiary companies that act as importers and distributors of products. Construction companies are also opening online markets to buy and sell materials.
It is essential for Australian companies to establish a good relationship with the buyers from both the private sector and the government sector to ensure maximum exposure.
In-market representation in the form of an agent or your own representative is desirable and successful entry into the building market often requires capital and patience.
Hong Kong has the additional advantage of being the ‘gateway to China’ and Australian companies will find that their Hong Kong business partners have many contacts with the rapidly expanding Chinese building and construction industry.
Price is the determining factor for success in Hong Kong as quality is expected.
It is important to introduce your products and services to those across the spectrum of the building industry as product selection can be influenced by one or a combination of:
- Architects
- Consulting engineers
- Developers
- Contractors
- Construction companies
More often than not, distributors or agents act as the intermediaries between suppliers and end-users. It is uncommon for contractors or end-users to deal directly with overseas companies, because of time constraints for completing projects.
In Hong Kong, many distributors also act as contractors and importers, and distributors also have associate companies in China. Such a business partnership can give Australian companies access to the vast opportunities in China. Re-exports to China from Hong Kong have increased rapidly over the last few years.
Links and industry contacts
Building and construction–related resources
Architectural Services Department – www.archsd.gov.hk
Buildings Department – www.bd.gov.hk
Civil Engineering and Development Department – www.cedd.gov.hk
Development Bureau – www.devb.gov.hk
Environment Bureau – www.enb.gov.hk
Hong Kong Housing Authority (Housing Department) – www.housingauthority.gov.hk/en
Hong Kong Logistics Development Council – www.logisticshk.gov.hk
Planning Department – www.pland.gov.hk
Transport & Housing Bureau – www.thb.gov.hk
Key organisations for green building
Business Environment Council – www.bec.org.hk
Council for Sustainable Development – www.susdev.org.hk
Electrical and Mechanical Services Department – www.emsd.gov.hk
Environmental Protection Department – www.epd.gov.hk
Green Council – www.greencouncil.org
HK-BEAM Society – www.beamsociety.org.hk
Hong Kong Green Building Council – www.hkgbc.org.hk
Hong Kong Institution of Architects – www.hkia.net
Hong Kong Institution of Engineers – www.hkie.org.hk
Hong Kong Institute of Landscape Architects – www.hkila.com
Hong Kong Institute of Planners – www.hkip.org.hk
Hong Kong Institute of Surveyors – www.hkis.org.hk
Professional Green Building Council – www.hkpgbc.org
Urban Renewal Authority – www.ura.org.hk
Private Hong Kong developers
Cheung Kong (Hldgs) Ltd – www.ckh.com.hk
Hang Lung Development Co Ltd – www.hanglung.com
Henderson Land Development Co Ltd – www.hld.com
Hong Kong Land – www.hkland.com
Hutchison Whampoa Property – www.hutchison-whampoa.com
Sino Land Co Ltd – www.sino-land.com
Sun Hung Kai Properties Ltd – www.shkp.com.hk
Swire Properties Ltd – www.swire.com
Wharf Ltd – www.wharf-holdings.com
Railways
Mass Transit Railway Corporation – www.mtr.com
Government, business and trade resources for Hong Kong
The Australian Chamber of Commerce in Hong Kong – www.austcham.com.hk
Hong Kong Trade Development Council – www.tdctrade.com
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.