CONSTRUCTION YEAR IN REVIEW & FORECAST
CONSTRUCTION YEAR IN REVIEW & FORECAST
Overall 2019 has been disappointing with a notable decline especially in new Civil construction projects commencing construction. The decline in the gross value of construction works (14% in the first half of 2019) has been somewhat offset by the high volume of work already in progress but the pipeline is beginning to dry up. The impact of a slowing global economy was already becoming evident in 2018 and its influence has continued to dampen investment confidence. However, clearly in 2019 the civil unrest has been a significant disruption, especially on the Legislative Council which has been limited in its ability to review tender contracts and funding applications. This dislocation has been particularly noticeable in the Civil sector construction with construction starts expected to plummet 48% in value in 2019 compared with 2018 although, according to the Construction Industry Council, a total of $HK70 billion of public works is pending for public approval. Yet despite the gloomy outlook, there have been some highlights. Thanks in particular to the Advanced Manufacturing Centre and Taikoo Place Phase 2B, the value of commencements for Office projects soared by 106% over the 2018 result. The commencement of The Fullerton Hotel @ Ocean Park and The Open University of Hong Kong – Nursing & Healthcare Complex contributed the positive 44% and 58% respectively in Retail & Hospitality and Education categories. Although we remain optimistic, we are also realistic about the prospects for 2020 with the Civil sector (essentially government funded) remaining subdued with the Building sector underpinned by Residential construction and some improvement in Retail and Hospitality expenditure.
CHAIN VOLUME MEASURE OF CONSTRUCTION (2016 PRICES) CENSUS & STATISTICS
Q2 2019 % CHANGE Y-O-Y HKD 28, 843 MILLION -9.0%
YEAR HKD MILLION % CHANGE
2017
194 890 7.5%
*2019e – the final figure for the year has been estimated (still two months to go) *2020f – this is a real forecast.
2018
181 437 -6.9%
2019E 138 114 -23.9%
2020F 139 546 +1.0%
CONSTRUCTION STARTS (FORECAST) BY CATEGORY JAN. 2019 - DEC. 2019 VS. JAN. 2018 - DEC. 2018
OFFICE
COMMUNITY INDUSTRIAL
RETAIL & HOSPITALITY RESIDENTIAL EDUCATION
72
CHANGE %
+106 +28
+44 -43
-26 +58
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