The city’s average building cost this year is projected to rise by 4.8 per cent to US$4,500 per square metre, according to a survey by the UK-based property consultancy Turner & Townsend.
That places Hong Kong in the ninth position out of 91 global cities, behind first-place New York at US$5,723 per sq m and San Francisco in second spot at US$5,489 per sq m, according to the survey.
Hong Kong is not alone with the scarcity of skilled construction workers. A total of 72 markets, or 79.1 per cent of the cities surveyed, reported labour shortage. Macau, less than an hour’s boat ride from Hong Kong, is in 12th place globally as a 3.5-per cent inflation is likely to push the city’s construction cost to US$4.269 per sq m.
“In 2024, we are seeing consistent trends across Asia in response to China’s economic slowdown,” Turner & Townsend’s Asia head of real estate Sumit Mukherjee said, adding that this year’s global construction cost is expected to be inflated by 3 per cent. “The shift to nearshore more manufacturing, to neutralise the impact of China’s slowdown, is creating significant growth and opportunities as other Asian markets invest in sectors like advanced manufacturing.”
That also helped to stall Hong Kong’s rise in the global rankings. Last year, Hong Kong dropped to 11th position globally just as the city was emerging from the pandemic, from the seventh position in 2022.
Mainland Chinese cities languish near the bottom of Turner & Townsend’s global rankings, as a festering real estate crisis has sent the construction industry into a near standstill.
Shenzhen, the Greater Bay Area city closest to Hong Kong, is the most expensive mainland location to build. Construction cost in the city of 17 million people is estimated at US$909 per sq m, ranked 83 places globally. Guangzhou, the provincial capital of Guangdong, is in 84th place, followed by Shanghai in the 85 place and Beijing in the 86th spot.
China’s gross domestic product growth is forecast to slow to 4.6 per cent in 2024 from 5.2 per cent last year as the country’s abundant labour force continues to keep costs low, according to the International Monetary Fund.
“The Chinese government’s response to its economic challenges is not yet clear, making the future of the market unpredictable and dampening investment confidence,” Turner & Townsend said in the report. “In the construction sector, most Chinese markets remain near the bottom of the overall cost table.”