Hong Kong Construction 2017: Forecast

2016 was a busy year for Hong Kong construction; we have seen the completion of several major MTR projects, whilst others have experienced significant delays and technical difficulties. As we consider how the construction market will fair in 2017 let’s take a look back at some of the key trends we identified during construction recruitment in 2016.

PROJECT DELAYS

Several major projects experienced significant delays during 2016, the most high profile and contentious of which is the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) project. The extent of the problems on the HK$ billion project were significant including soaring labour costs, which have nearly doubled for most trades, since the original contracts were awarded back in 2010. The overall 23km project is now nearly a third over budget and is expected to be delivered in Q3 2018, nearly three years late.

Another project which has seen similar delays is the Hong Kong-Zhuhai-Macau Bridge. The bridge linking Hong Kong to Macau and Zhuhai which has a budget of HK$117 billion will miss its 2016 deadline by nearly 1 year. The bridge's completion has been pushed back until the end of 2017 due to a number of factors including: unstable material supplies, shortages of labour, dealing with aviation height limits, environmental protection requirements and slower than expected progress in land reclamation.

A little further afield in Macau the Light rail transit (LRT) project has also experienced substantial problems and delays. The Taipa portion of the project, which includes stops serving the Cotai casino resorts, will be 9.3-kilometres (5.8-miles) long and have a total of 11 stations is now struggling to meet a target operational target of 2019. The delays were caused by a setback in the building of a rail depot on Taipa. The government eventually terminated the contract with the company originally hired to do the work.

Because of the ongoing project delays during 2016 we have seen regular demand from claims consultancies seeking experienced claims consultant candidates to help work on delay, claims and dispute resolution work on these problem projects. Although our clients often seek candidates with previous Hong Kong claims related work experience this is not necessarily a prerequisite, and we often find that overseas candidates with relevant claims experience can fit well into the Hong Kong claims market.

LOCAL DEMAND

Hong Kong has always attracted overseas construction professionals and over the past decade we have seen a strong demand from Hong Kong based construction companies to employ these candidates. However during 2016 we have this change with the majority of clients seeking to employ local Cantonese speaking candidates rather than expatriate candidates.

Although there is still a number of large international construction companies operating in Hong Kong, 2016 has seen an increase in the number of new projects awarded to locally based construction companies – this trend has in turn seen recruitment demand from local companies increase. Although these companies will consider expatriate candidates the fact remains that they still seek to employ local candidates in the majority of cases.

As a number of the international companies in Hong Kong complete their projects and struggle to win new work we expect recruitment of local Cantonese candidates to remain strong in 2017.

SPECIALIST M&E DEMAND

As with previous years the demand for experienced M&E candidates remained strong during 2016. With numerous MTR and major building projects incorporating major elements of building services and mechanical and electrical components the demand for professionals experienced in this area often outweighs the supply in the local market.

Although a lot of specialist M&E companies in Hong Kong seek local candidates as a first priority the available supply in the local market is often lacking, this has opened the door for expatriates with strong M&E experience to work in Hong Kong. We expect demand to remain strong in 2017 with opportunities for both expatriate and local M&E candidates.

2017 OUTLOOK

We expect many of the trends of 2016 to continue into 2017. Some of the key trends we predict to see are summarized below:

• Continued delays - Many of the delayed projects will continue to experience difficulties providing a strong claims and dispute resolution market for construction claims companies in Hong Kong. We expect these opportunities to be open to both local and expatriate candidates with relevant experience.
• International contractors leave Hong Kong - We expect to see a decrease in the number of international contractors operating in Hong Kong during 2017. As a number of these companies complete their existing project commitments and have a lack a new project awards we expect these companies to leave Hong Kong until they can tend for new work in the future.
• Continued local candidate demand - Local candidate demand will remain strong during 2017. As a number of the international contractors are expected to leave Hong Kong the number of local Hong Kong construction companies winning new project will increase. The companies will require new staff and will seek to employ local Cantonese speakers as a first preference.
• Specialist M&E demand to remain strong - As with the previous year, specialist M&E professionals will remain in strong demand. We expect these positions to be open to both local and expatriate candidates.
• Hong Kong International Airport project demand – As we see a number of the major MTR projects complete in 2017 we expect the new 3^rd runway project at Hong Kong International Airport to be the next landmark project to create a big demand for construction professionals in Hong Kong. With several of the major reclamation contracts already awarded we expect 2017 to be a busy year for construction at the airport.

With 2017 set to be a busy year if you’d like to learn more about what you can expect from the Hong Kong Construction industry in 2017 please get in touch.

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Tim Cole
Senior Recruitment Consultant – Hong Kong & Asia