According to the latest issue of RLB Construction Cost Update HK Report, the tender price index is forecast to experience a stable or slight decline in the upcoming quarters.
During the second quarter of 2025, Hong Kong’s economy maintained robust growth, driven by solid export growth and a pickup in domestic demand. Despite the promising economic growth, the construction industry is facing an intense drop in its growth compared to the previous quarters. The building and construction expenditure fell by 9.5% year-on-year generally, with a decline of 10.1% and 8.8% year-on-year for the private and public sectors respectively.
The Chief Executive’s 2025 Policy Address signals an escalated development of Hong Kong’s construction industry. The Northern Metropolis will be accelerated with dedicated legislation, new development committee, and eased administrative procedures. Besides, the increase of housing supply is targeted for this decade by fastening the Public Rental Housing construction, launching the Light Public Housing (LPH), targeting to construct 126,000 units of private housing, and redeveloping Ma Tau Wai and Sai Wan Estate. Currently, about 10,000 LPH units will be completed for intake by the end of this year. Overall, a total of 189,000 public housing units, inclusive of LPH, are slated for completion over the next five years.
Based on land sales from July to September 2025—whether through land sales or redevelopment of privately held land—approximately 4,950 units of private housing units are expected to be developed. However, external uncertainties, such as evolving U.S. tariff policies and the timing of interest rate cuts, may impact global trade dynamics and dampen local investment sentiment. Amid the ongoing contraction in the construction sector, overall construction expenditure is likely to continue its downward trend. To maintain their project pipelines, contractors may adopt more aggressive bidding strategies, which could result in a stable or slightly declining tender price index in the upcoming quarters.
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