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Hong Kong and Macau are Asia’s Most Expensive Construction Markets to Build in 2024

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Hong Kong and Macau are Asia’s most expensive construction markets to build in this year at $4,500 and $4,269 per square metre respectively – and the ninth and 12th most expensive cities globally. The economic slowdown in China and the rise in nearshoring activities worldwide are opening up new construction opportunities for key emerging markets in Asia with Malaysia, Indonesia and India all benefitting.

 

The international trend of nearshoring, friend-shoring and reshoring is stimulating construction demand for local manufacturing bases in Asia to reduce reliance on cross-border trade. Meanwhile, as developed markets in the region adjust to both macroeconomic and domestic challenges, Hong Kong re-enters the top 10 list of most expensive markets to build in globally, in ninth place, with an average cost of US$4,500 per square metre, followed closely by Macau in 12th with an average cost of US$4,269 per square metre

 

The International Construction Market Survey (ICMS) 2024 report, from global professional services company Turner & Townsend, shows that while construction still faces challenges, inflationary pressure is softening, and stabilising costs are allowing investment flow in key global growth sectors such as data centres, healthcare and manufacturing.

 

From a survey of 91 global cities, except Hong Kong and Macau, all Chinese markets languish near the bottom of the overall cost table. China’s GDP growth is forecast to slow to 4.6 percent in 2024 from 5.2 percent last year1 as the country’s abundant labour force continues to keep costs low across its mainland markets.

 

Japanese cities, stalwarts in the top ten most expensive cities to build in globally for the past two years, have slipped out of the top rankings this year. Tokyo, ranked fifth, and Osaka, sixth, in 2023 are now the 13th and 17th most expensive markets to build in worldwide at US$ 4,127 per square metre and US$3,985 per square metre, respectively. Strong global inflation, moderate post-pandemic economic growth, and a significant devaluation of the Yen to a 34-year low, are key factors behind Japan’s lower overall construction costs this year. The weakened Yen, however, has spurred foreign investment into sectors such as data centres, advanced manufacturing and urban developments, all of which are experiencing high growth. Osaka, in particular, is seeing a major development boom as it prepares for World Expo 2025.

 

India has seen strong industrial investment as it strengthens its economic drivers – particularly in advanced manufacturing – as it looks to overtake China. This is seen in Bangalore, where advanced manufacturing construction costs are now US$1,861 per square metre, compared with US$568 per square metre in Shenzhen. Malaysia and Indonesia are also seeing high growth in manufacturing as part of this shift, and in Jakarta, the cost of advanced manufacturing construction has sharply risen.

 

A significant factor driving inflation worldwide is a scarcity of skilled labour. A staggering 79.1 percent of markets, representing 72 individual markets, reported skill shortages.  This stands in stark contrast to just 9.9 percent, or 9 markets, with a labour surplus. The remaining 11 percent, or 10 markets, indicated a balanced labour market. This imbalance between supply and demand for skilled workers is putting continued upward pressure on construction costs globally.

 

Overall, the data points to lowering construction price inflationary pressure globally. Turner & Townsend has modestly reduced its 2024 construction cost inflation forecasts compared to last year. Construction cost inflation in most markets is driven by a backlog of projects, which are gradually moving forward as construction costs stabilise.

Sumit Mukherjee, head of real estate, Asia, at Turner & Townsend, said “In 2024 we’re seeing consistent trends across Asia in response to the impact of China’s economic slowdown. The shift to nearshore 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. Other growth areas are being fuelled by Asia’s increasing population and wealth – with much greater demand for leisure and hospitality construction as well as investment in new education and healthcare facilities.

 

“In the context of this growth and opportunity – clients need to keep an eye on labour.  Traditionally Asian labour markets are known for high availability and low wages – but as demand grows for specialist construction such as advanced manufacture and data centres, there may be bottlenecks of high-skilled workers in these sectors. Keeping close to supply chains and regularly assessing local development pipelines is essential to avoid potential issues.”

 

Iconic Parisian tower comes to life in Macau

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Reading Time: 3 minutes
An artist’s rendering depicts The Parisian Macao, slated to open in the second half of 2016. Image courtesy of Sands China Ltd

An artist’s rendering depicts The Parisian Macao, slated to open in the second half of 2016. Image courtesy of Sands China Ltd

Standing next to another distinguishable Sands development, The Venetian Macao, the replica Eiffel Tower at the Parisian Macao is set to become both a landmark feature and a popular outlook, offering guests and visitors alike spectacular views of Macau’s bustling Cotai Strip.

The Macau Eiffel Tower, which is half the scale of the original, is a faithful replica of the famed 19th century counterpart in Paris, and retains many decorative features of its Paris cousin, including cornice scrolls, balustrades, gussets plates, lattices, staircases and mesh screens around the observation decks.

Global engineering consultants Aurecon was closely involved in the planning and design for the distinctive new structure. The company provided full structural engineering consultancy on the job, and helped manage the difficulties of maintaining an authentic design while addressing the challenges caused by extreme weather, a congested construction site, and the anticipated high number of visitors.

At the project’s outset, Aurecon provided the drafting of the tower using Revit software, which allowed the team to visually represent the complicated design connections in 3D. This made it easier to detect any potential challenges or clashes that might arise during construction even before building work had begun. As a result, this ensured time-consuming amendments at the shop drawing preparation or fabrication stage were avoided.

“The key to recreating this iconic landmark has been strong team work and the close collaboration between the design and construction teams,” says Dr Alecs Chong, Aurecon’s project leader on the Macau Eiffel Tower. Dr Chong says the close co-operation between the design and construction teams started at the earliest stages of the project, and has delivered efficiency improvements from the beginning.

Among the biggest challenges for the design team was addressing the issue of typhoons, which occur seasonally in Macau. In particular, the design team had to ensure it made the correct critical wind loading calculations for the tower in the event of a direct hit from a typhoon.

“We used the Equivalent Static Wind Loads (ESWL) approach developed for towers to determine the critical wind loads,” says Dr Chong. “We also ran a series of studies to investigate the wind-induced dynamic response at the tower’s top peak at various wind speeds. And we then looked at the subsequent impact on human comfort in terms of potential vibrations. Our thorough investigations and scenario planning allowed the project team to ensure not only an aesthetically pleasing and accurate design, but also a safe one.”

A luffing jib crane facilitated the modular construction method on site. Image courtesy of Aurecon.

A luffing jib crane facilitated the modular construction method on site. Image courtesy of Aurecon.

A further challenge for the design team was accounting for the very high number of visitors the attraction is likely to draw. In particular, says Dr Chong, they focused on the footbridge that will connect the tower with an adjacent casino complex. Aurecon and its partners also had to contend with how to get the large steel sections needed for the tower’s construction to the job site and, once there, how to assemble them.

“The port of Macau is neither large enough nor deep enough for the vessels that would normally deliver the oversized steel sections needed,” says Dr Chong. “As a result, the job had to request shallow-hulled vessels, but this limited delivery capacity. This, in turn, meant we had to plan the size of the delivery racks, to maximise delivery capacity and minimise delivery costs, which were estimated as being anything up to a quarter of the overall material cost.” And on the job site itself, there was a challenge presented by the selection of the tower crane needed to place the steel and other building materials.

The solution came in the form of a luffing jib crane, which can articulate its jib between the horizontal and near vertical angles. Using such a crane, and fitting it with a shorter jib, meant less of the lifting force was distributed laterally and more was directed down the crane’s mast. With a maximum hoisting capacity of 28 tons, the crane facilitated the modular construction method on site, overseeing the fast and safe installation of building elements.

Overall, says Dr Chong, being involved on the recreation of the Eiffel Tower on the Parisian Macao Integrated Resort has been a hugely challenging yet rewarding venture for the team at Aurecon. Visit www.aurecongroup.com for more.