Hong Kong, Macau and Tokyo most expensive Asian cities to build

04 May 2023 Consultancy.asia 2 min. read

Hong Kong, Macau, and Tokyo are the most expensive Asian cities for construction projects, according to a global benchmark by Arcadis.

Hong Kong ranked 8th on the list of the most expensive cities in the world to build, according to the 2023 International Construction Costs Index, behind the European cities of Zurich and Copenhagen.

Key strategic developments in Hong Kong’s construction market include the HKD100 billion Northern Metropolis and the Kau Yi Chau Artificial Islands in the Central Waters, which will provide additional land and create significant opportunities for the sector. The country also has a number of large infrastructure projects planned.

International Construction Costs Index 2023

The construction sector in Hong Kong is set for strong growth in the coming years. According to an estimate by the Construction Industry Council (CIC), total construction expenditure in Hong Kong will keep rising steadily and may exceed HK$300 billion per annum in the next couple of years. This represents an 28% increase on 2021 output levels, which totalled HK$233bn in nominal terms.

However, the Arcadis report noted that Hong Kong may face a workforce issue, with Hong Kong facing a decrease in labor force due to an ageing population. “The increased use of innovative technology and adoption of Modular Integrated Construction methods, aided by a government injection of HKD1.2 billion into the Construction Innovation and Technology Fund for FY 2022/2023, should help,” said Francis Au, a leader at Arcadis.

At number 11 in the index ranks Macau, a special administrative region of China renowned for its vibrant casino industry and rich cultural heritage. This makes it the second most expensive city to build in Asia.

Last year, the Macau construction market reached a total valuation of $4.8 billion. Projections indicate that the market will experience a steady growth rate, with an anticipated average annual growth rate exceeding 2% from 2023 to 2026.

This growth is expected to be driven by investments in various sectors, including health, education, transport, tourism and housing projects.

Ranked as the 19th most expensive city to build by Arcadis, Tokyo sits in between Los Angeles and Las Vegas. The Japanese capital has consistently ranked in the higher parts of the index over the past years, in part due to factors such as an expanding domestic real estate market, the rise of double-income households, low unemployment rates, a tax system that favors real estate ownership, a scarcity of luxury housing, and an upward trend in construction costs.

Notably, in Tokyo, the demand for residential properties stems predominantly from domestic buyers with very little dependence on foreign buyers.

The top three cities in the index – or the world’s most expensive places to build – are held by Geneva, London and New York.