As the Hong Kong Special Administrative Region formulates its first five-year plan and aligns its development with the national 15th Five-Year Plan (2026-30), the Northern Metropolis stands as the city’s premier growth engine. Positioned to expand urban development capacity and catalyze an innovation and technology (I&T) ecosystem, the project is essential to the SAR’s long-term prosperity. However, the ambitious vision is unfolding against a challenging fiscal backdrop. Driven by mega-projects like the Northern Metropolis, Hong Kong’s annual capital works expenditure has surged from past yearly averages of around HK$90 billion ($11.5 billion) to an estimated HK$128 billion in the 2026-27 budget cycle. Capital spending now accounts for nearly 4 percent of local GDP — a level that threatens to overstretch fiscal reserves if left unmanaged.
To ensure the Northern Metropolis achieves its vision sustainably, the HKSAR government must transition from a traditional, cost-insensitive infrastructure paradigm to an agile, cost-conscious, and regionally integrated strategy. By removing structural administrative bottlenecks and deepening Guangdong-Hong Kong-Macao Greater Bay Area synergies, Hong Kong can effectively reduce infrastructure costs while accelerating delivery schedules.
A primary driver of Hong Kong’s high public construction costs — which currently stand four to five times higher than those in neighboring Greater Bay Area cities — is “institutional friction”. Conservative administrative workflows, protracted multidepartmental approvals, and rigid adherence to localized building codes generate significant premium costs, while raw construction materials in Hong Kong cost over twice as much as on the Chinese mainland on average.
To dismantle these structural cost drivers, the government should establish a dedicated construction standards task force under the Hong Kong Building Technology Research Institute, comprising professional societies, university experts, and mainland counterparts. By systematically auditing technical standards across materials, structural design, and equipment, this task force can identify mainland standards that match or exceed Hong Kong’s safety benchmarks. Establishing a “green channel for mutual standard recognition” for Northern Metropolis projects would allow developers and contractors to directly apply approved mainland standards and certified materials across all construction within the zone, breaking localized market monopolies and lowering procurement overheads.
The Northern Metropolis University Town, planned across key nodes including Hung Shui Kiu/Ha Tsuen, Ngau Tam Mei, and New Territories North, represents a critical element of Hong Kong’s ambition to become an international education hub. However, constructing stand-alone, full-scale campuses for each participating institution risks duplicating capital expenditure by tens of billions of dollars.
Hong Kong should adopt a lean, integrated development model using a progressive “campus-park-community” approach, prioritizing the Hung Shui Kiu/Ha Tsuen area for early implementation. Land planning within the university town must emphasize shared regional infrastructure. By centrally funding and managing shared facilities, such as large-scale scientific platforms, shared laboratories, and pilot testing facilities, the government can eliminate redundant construction. To further ease public financial pressure, universities should be encouraged to utilize innovative financing models, supported by government-backed loan guarantees to reduce interest burdens. Complementing this, adopting a “phase development” approach on a trial basis with reference to the mainland’s “1.5-level development” concept (i.e., deploy low-cost, short-term flexible projects prior to permanent construction) in commercial and community sectors will activate regional capacity and satisfy talent living needs with minimal initial public investment.
Historical cost overruns on major public works — such as the HK$19.42 billion overrun (+29.9 percent) on the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the HK$10.06 billion overrun (+12.61 percent) on the Shatin to Central Link — underscore the need for systemic governance reform. Currently, civil service evaluation frameworks lack explicit mandates tying project management directly to fiscal efficiency.
Hong Kong should establish a formal cost-benefit accountability system for public works. Under this framework, lead engineers and project directors will be evaluated against strict “on-time” and “on-budget” key performance indicators. Any budget variance exceeding a 10 percent threshold should trigger mandatory independent accountability reviews. Operating alongside this, a dedicated cost-efficiency monitoring panel under the Northern Metropolis Development Committee should be empowered to audit expenditure across all project phases, enforce statutory approval timelines to prevent procedural drag, and hold department officials accountable for administrative delays.
Consultancy and advisory fees consume a substantial portion of public works budgets. However, market concentration remains acute: Out of 98 registered consultancy firms, only 17 were awarded public works contracts from 2021 to 2024, with two multinational firms capturing nearly 80 percent of urban development planning studies from 2007 to 2024. Furthermore, requiring stand-alone technical, environmental, and geological studies for every new plot results in duplicated expenditure.
The administration should build a centralized infrastructure research database to archive regional baseline surveys, environmental impact assessments, and geological reports. Departments planning Northern Metropolis projects would be required to prioritize drawing from existing data, engaging external consultants strictly on an as-needed basis. Furthermore, the government must address market concentration by opening its public works registry to top-tier mainland design institutes and consultancies, explicitly recognizing mainland project experience in the selection criteria to introduce healthy competition.
Labor accounts for roughly 50 percent of total construction costs in Hong Kong when combined with materials. A severe structural shortage of skilled labor has driven site wages up significantly, with specialized trades like rebar workers earning nearly 5.9 times the daily wage of their mainland counterparts. While the Labour Importation Scheme for the Construction Sector was introduced to address shortages, its rigid 1:2 local-to-imported ratio, median-wage floors, and strict project-specific deployment restrictions limit its effectiveness.
To expand labor liquidity, the government should introduce a special labor program for major Northern Metropolis infrastructure projects. It should adjust the local-to-imported labor ratio to 2:1 (permitting two imported workers for every local worker hired) within designated Northern Metropolis construction zones, ease strict median-wage restrictions, and permit flexible labor deployment across multiple sites within the zone.
Technological integration offers the surest foundation for long-term productivity and cost reduction. However, smart construction adoption in Hong Kong remains constrained by fragmented technical standards and limited local prefabrication capacity. Hong Kong should partner with Greater Bay Area mainland municipal authorities to establish unified smart construction technical standards and a mutual recognition catalog. By mandating advanced Modular Integrated Construction and robotic construction across Northern Metropolis public housing, schools, and transport hubs, Hong Kong can establish a collaborative “Hong Kong R&D + Greater Bay Area Manufacturing + Northern Metropolis Application” industrial ecosystem. Utilizing Guangdong’s massive prefabrication supply chains will drastically shorten development cycles and lower baseline building costs across major public works.
The Northern Metropolis represents an unprecedented opportunity to redefine Hong Kong’s urban landscape and economic future. However, strategic ambition must be matched by fiscal discipline. By modernizing administrative approvals, optimizing consultancy practices, expanding labor liquidity, and leveraging the industrial strengths of the Greater Bay Area, Hong Kong can de-escalate infrastructure costs while maintaining world-class standards. Controlling baseline costs today will ensure that the Northern Metropolis develops not as a burden on public reserves, but as a resilient, cost-effective platform for sustained prosperity.
The author is an expert member of the Chief Executive’s Policy Unit.
The views do not necessarily reflect those of China Daily.
