Construction soars in Hong Kong as the city moves to restrict foreign buyers

Construction in Hong Kong continues to soar with contractors carrying out 33.6 percent more work in the second quarter of 2012 than in the same period last year.

According to figures from the Census and Statistics Department, $5 billion of construction was carried out in the second quarter in the Chinese city. The private sector saw the biggest rise in construction with works in this area increasing by a staggering 53.7 percent to total $1.7 billion. The value of public sector works also increased over the year, up 17.1 percent to total $1.8 billion during the quarter.

Looked at as a whole it appears that residential building projects are fueling the current construction boom in Hong Kong. The city has seen house prices double over the last four years as Chinese investors, driven by a desire to seek higher returns and to move their assets abroad, continue to snap up apartments. In order to meet increasing demand for new build properties residential construction was up 55.2 percent on figures in the same period last year.

The rapidly rising cost of homes is out-pricing Hong Kong locals, with many now unable to afford new homes in the city. In order to combat the overinflated prices the Hong Kong government in September announced the first step in a policy aimed at restricted foreigners from buying property in the city.

Under the policy known as “Hong Kong land for Hong Kong people” the executive of the city has said that only Hong Kong permanent residents will be able to buy flats built on two sites that will provide around 1,100 homes next year. In addition the resale of residential units will be restricted to locals for 30 years and incorporated companies will also not be allowed to purchase them.

Other measures include increasing land supply by converting 36 sites meant for government and public use to residential property to provide space for nearly 12,000 units.

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