Out-Law Analysis | 20 Jan 2023 | 3:03 am | 3 min. read
The Hong Kong Special Administrative Region (SAR) administration announced major plans in last year’s Budget to continue investing in construction and infrastructure works, indicating strong growth and a positive outlook for the construction sector in the region.
These plans include the administration’s commitment to more land creation, expanding the railway and road infrastructure networks, investing in housing and sports and recreational facilities, supporting worker and project-related personnel training and promoting the adoption of innovation and technology in the construction industry.
With the 2023-24 Budget soon to be announced, construction of these major infrastructure projects and new initiatives associated with them will soon begin. Contractors should be aware of the implications and plan accordingly. Here, we highlight some of the most significant upcoming opportunities for the construction industry, ahead of a future piece on implications for contractors.
With a view to drive Hong Kong's economic as well as innovation and technology development, housing supply, conservation efforts, and cooperation and integration with the Greater Bay Area (GBA), the Hong Kong SAR administration announced in the 2021 Policy Address the development of 30,000 hectares of land in the northern part of the New Territories into the Northern Metropolis, which is the Northern Metropolis Development Strategy.
In the 2022-23 Budget, the administration allocated HK$100bn to expedite the implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis.
It is estimated that it will take 20 years to complete all the key projects under the plan. These include innovation and technology (I&T) construction, new road and railway projects, cultural and recreational facilities, conservation and eco-recreation projects, and large-scale housing land expansion projects.
Upon completion, the Northern Metropolis is expected to emerge as a "new international I&T city" which will eventually accommodate a residential population of approximately 2.5 million and provide about 650,000 jobs.
Announced in the 2018 Policy Address, the Lantau Tomorrow Vision is made up of various projects including formation of artificial islands in the Central Waters; a roads and rail network to connect the artificial islands, Hong Kong Island, Lantau and coastal areas of Tuen Mun; reclamation at Lung Kwu Tan, Sunny Bay and Siu Ho Wan; and re-planning of the coastal area of Tuen Mun.
The project is estimated to cost HK$624bn as of September 2018 prices, with costs related to the Kau Yi Chau Artificial Islands and its supporting transportation networks rising to HK$580bn from the original HK$500bn estimated in early 2019. The administration aims to complete all key projects in the next 20-30 years. A full breakdown of projected costs as of March 2019 is provided in pages 34-35 of a legislative council discussion paper (35-page / 3MB PDF)
Upon completion, it is expected the artificial islands will be able to provide housing to accommodate a population of 700,000 to 1,100,000, of which 70% of the units will be public housing.
As of the current plan in the Northern Metropolis Development Strategy, there will be five new and extended railway lines including cross-boundary projects, connecting the Northern Metropolis with other areas in Hong Kong and mainland China. As for the Lantau Tomorrow Vision, a comprehensive network of strategic roads and rail will also be created to connect the artificial islands with the Hong Kong Island, Lantau and the coastal areas of Tuen Mun.
In the 2016 and 2018 Policy Address, the first and second 10-year Hospital Development Plans were announced to meet new demand and improve existing services, with a total of HK$470 bn (10-page / 230 KB PDF) dedicated to over 35 projects involving the construction and redevelopment of public hospitals, community health centres and supporting services centres.
There will also be a wave of construction and upgrading of sports and recreational facilities in the upcoming years as the Hong Kong SAR administration announced in the 2022-23 Budget that it would implement the HK$20bn Five-year Plan for sports and recreational facilities.
Coupled with the upcoming infrastructure projects, the administration's 2022-23 Budget provisions in relation to human resources and technology are also encouraging signs for the future growth and development of the construction industry in Hong Kong SAR.
In human resources, the administration allocated HK$1 bn to support the training of manpower in the construction industry, adding an estimated 27,000 semi-skilled and skilled workers into the construction industry in coming years; allocated HK$30mn to the Centre of Excellence for Major Project Leaders for training project-related personnel of major public organisations as well as those working for consultants and contractors engaged in public works projects; and announced that it would step up efforts to attract more young people to join the industry.
In technology, the Hong Kong SAR administration has planned an additional HK$1.2bn for the Construction Innovation and Technology Fund to expand its funding scope and increase its funding ceiling; allocated HK$30mn to promote applied R&D and adoption of new materials and innovative construction technologies in public works and the construction industry in the next three years; and will introduce more concessionary measures to encourage the application of Modular Integrated Construction (MiC). An increased use of modern construction methods is expected to increase productivity, shorten construction time and expedite housing supply.
Co-written by Cynthia Chan and Jason Wong of Pinsent Masons.