Boston, MA -- (SBWIRE) -- 11/22/2013 -- Construction activity in Hong Kong decelerated in H113, as we had expected. We believe this is owing to high-base effects, a near-term decline in the project pipeline and a slowdown in China's economic activity. As such, we maintain our view that construction growth in 2013 is unlikely to surpass previous highs, and will be lower than growth witnessed in 2012. We are forecasting construction real growth in Hong Kong to decelerate from 11.3% in 2012 to 2.0% in 2013. However, we reiterate that this outlook does not mean a dearth in growth opportunities in the city over the long-term as the government has a large number of construction projects planned over the coming years.

Key developments in Hong Kong's infrastructure sector:

- In August 2013, France-based construction firm Bouygues Construction secured a US$1.53bn contract to design and construct a 4.2km undersea road tunnel in Hong Kong. The contract was secured through subsidiaries Dragages Hong Kong and Bouygues Travaux Publics. The project will include building a twin-tube tunnel, each tube with a diameter of 14m. The tunnel will connect the New Territories, north of Hong Kong, to Lantau Island. Two tunnel boring machines will be used for the tunnel, which will be 50m below sea level. Forty-two cross passages will connect the two tunnel tubes at every 100m.
- In September 2013, French electronics company Thales was awarded a HKD642.5mn (US$62.9mn) contract to install communications equipment on trains in Hong Kong, reports the Railway Gazette. The train control equipment will be installed on the first phase of the Shatin-Central Link. The first phase of the project will involve the upgrading of the Ma On Shan and West Rail Lines.
- In September 2013, the Hong Kong government launched a proposal for developers to build subsidised public housing, reports Intellasia. A public consultation will now be held for a period of three months. The government intends to build a total of 470,000 new homes by 2023, 60% of which will be public housing.

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