Hongkong
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Hong Kong has overtaken Tokyo as Asia’s most expensive city to build property, according to a new market survey released by Turner & Townsend, as rising construction prices add to a worsening labor shortage.
The UK-based real estate consultancy expects average construction costs in Hong Kong to rise 4.8% this year to US$4,500 per square meter, ranking ninth globally among 91 cities surveyed.
Only cities in the United States and Switzerland ranked higher, with New York City in first place at $5,723 per square meter, followed by San Francisco ($5,489) and Zurich ($5,035).
Sumit Mukherjee, head of Asia real estate at Turner & Townsend, said: “Skilled labor shortages and stable domestic construction demand are key factors influencing Hong Kong’s ICMS ranking this year.”
The survey found that a shortage of skilled labor is the biggest challenge facing Asia’s construction industry more broadly.
This is particularly the case in Hong Kong, where the city’s construction industry faces a manpower shortage as its population ages.
According to the Construction Industry Council of Hong Kong, the skilled labor gap is expected to be as high as 40,000 by 2027.
Last year, the Hong Kong Census and Statistics Department predicted that Hong Kong’s aging population would worsen due to low fertility rates last year.
By 2046, more than one-third of citizens are expected to be 65 or older, driving down the overall labor force participation rate, the report said.
Meanwhile, consultancy PwC said last year that the city’s “serious labor shortage” was also the result of a surge in immigration and global competition for talent. As of September, government measures aimed at attracting and retaining talent at home and abroad have done little to address the problem.
Macau is another special economic zone in China, ranking 2nd in Asia and 12th globally, with an average construction cost of US$4,269 per square meter.
in Japan and China
Turner & Townsend said Japanese cities regularly top ICMS construction cost rankings as the country has been pressured by an aging population and chronic labor shortages.
However, in Turner & Townsend’s 2024 survey, no Japanese city ranked in the global top 10, although Tokyo ranked third in Asia, followed by Sapporo, Osaka, Hiroshima and Fukuoka.
Mukherjee said this was due to the depreciation of the yen and only modest economic growth after the epidemic.
Ranking at the bottom of the construction cost survey were cities in mainland China, which have abundant labor forces that help keep construction costs low, the consultancy said.
The worsening real estate crisis has also brought China’s construction industry to a near standstill, suppressing demand and costs, the report added.
“The Chinese government’s response to economic challenges remains unclear, making the market’s future difficult to predict and dampening investment confidence,” the report stated.
