A letter from Hong Kong

The question asked most frequently about Hong Kong is what was the effect of the handover to China four years ago. The simple answer is that the gross value of construction work in the private sector sites is down by more than 30% compared with 1997. The more complicated answer is that it is a conundrum, because handover coincided with the crash of east Asia's economies, and the Hong Kong market was inflated by the construction of Chek Lap Kok airport.

The information available on the past four years makes depressing reading. The completion of the airport and the slump in the property sector has resulted in a fall in salaries for many professionals as companies compete for the work that remains. A good example is the construction of Kowloon Canton Railway Corporation's £4bn West Rail, a project to link Kowloon with the New Territories; the pricing was so competitive that the professionals who won the work didn't feel much benefit in their bank balances.

As for the political dimension, the slogan is "one country, two systems". However, most Hong Kong people are more concerned with their ethnic and cultural identities than with which political system they operate within. And, of course, with finding somewhere to live. Hong Kong has a population density of 5412 people a square mile. That is a lot of humanity – everywhere is crowded, everywhere is noisy – and they need lots of buildings to accommodate their needs. The demand has led to the creation of the 400 ft2 "sandwich class" apartment, and small pockets of land have been auctioned at sums that would fund whole housing estates in other countries. The result is the spread of slender, ever rising housing blocks.

Regardless of the downward trend of the construction market, the gleaming chrome and glass of the waterfront's newer skyscrapers look to the future. Hong Kong is a city driven by the commercial imperative of "getting ahead", and has never had much time for the past.

In the construction industry, this imperative boils down to "time is money". Even when it rains (and it never rains but it pours), little stops construction activity. Concrete is placed in all weathers, and many's the time I have watched labour trying to work with a liquid mass that more resembles a runny grey gruel than concrete. To many, the short timescales compromise quality and safety, a factor that has been highlighted in Construct for Excellence, the report of the Construction Industry Review Committee, released in January this year.

Concrete is placed in all weathers and many’s the time I have watched labourers trying to work with a liquid mass that resembles a runny grey gruel

The report, which may sound familiar to UK ears, envisages an integrated construction industry that is capable of continuous improvement and seeks excellence in a market-driven environment. It runs for more than 200 pages and deals very well with the many issues that affect construction in Hong Kong today. What is not certain yet is whether the bureaucracy can be galvanised into adopting the leadership role envisaged by the committee and implementing its 109 recommendations.

However, even the unreconstructed construction industry has much to be proud of. This is a place where everything works. Not only are the buildings first class, but so is the transportation system, and the engineering feats that made it so are spectacular. Indeed, not only is Hong Kong an excellent base for regional activity, but it also has a good claim to be Asia's premier world city.

So what does the future look like? Although Hong Kong is unlikely to have another construction project on the scale of Chek Lap Kok, its largest ever, it will have the a Disney resort, and the Beijing Olympics will lead to a number of infrastructure projects. What is still unclear is how it will be affected by its exposure to the mainland Chinese market. One of the first effects is that margins are tight and getting tighter still as mainland construction firms buy in to the local market.