Boston, MA -- (ReleaseWire) -- 01/08/2014 -- We do not expect a significant improvement in construction growth in 2014, as several factors - namely a near-term decline in the project pipeline and a slowdown in China's economic activity - are likely to dampen construction activity in 2013 and continue into 2014. We are therefore forecasting full-year real growth for Hong Kong's construction sector to reach 2.2% in 2014, from 1.5% growth in 2013. However, we reiterate that this outlook does not mean a dearth in growth opportunities in Hong Kong 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 14 metres (m). 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. The project is expected to be completed in 2018.
- In November 2013, CLP Holdings announced that its wholly owned subsidiary CLP Power Hong Kong reached an agreement with China South Power Grid (CSG) to each acquire half of the 60% interest in Castle Peak Power (CPP) held by ExxonMobil. CLP Power will acquire the 30% stake for a cash consideration of HKD12bn. In a separate arrangement, CLP Power will also purchase ExxonMobil's 51% stake in Hong Kong Pumped Storage Development (PSDC) for HKD2bn. Following the completion of the transactions, CLP Power will hold 70% of CPP and 100% of PSDC. CSG will own the remaining 30% of CPP. To finance the acquisitions, CLP has secured a HKD10bn loan from HSBC. The stake sale is expected to be completed in mid-2014.
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