Property, connectivity, and skills: 3 headlines from the 2025-26 Hong Kong budget

The Hong Kong Budget for 2025-26, presented by Financial Secretary Paul Chan on 26 February 2025, comes at a time of economic uncertainty.

It's also a time when the government is looking to cut spending and increase revenue to stabilise public finances.

The budget reflects efforts to balance these short-term aims with long-term, strategic investment in infrastructure.

Hong Kong’s economic challenges include a weak property market, high interest rates, and slowing trade with China.

This calls for an industrial strategy that stimulates investment in infrastructure, land development, and skills to drive sustainable growth.

The headlines: property, connectivity, and skills

The budget unveiled a series of infrastructure-related initiatives, with three stand-out takeaways:

1. Reviving the property market and rethinking land use and supply

To stabilise the property market and respond to demand patterns, the budget maintains a strong focus on ensuring a steady land and housing supply.

The 2025/26 Land Sale Programme, together with railway property developments and Urban Renewal Authority (URA) projects, will release approximately 13,700 homes.

Over the next five years, there are plans to supply land for at least 80,000 private homes.

This represents a marked decrease from the past five years. However, no commercial land sales are planned this year, with some sites potentially being re-zoned for residential use.

In keeping with this, the government has adjusted stamp duty policies. The lowest stamp duty now applies to properties valued up to HK$4 million, up from the previous limit of HK$3 million. This will benefit about 15% of transactions.

However, the oversupply of residential units can hold back market recovery as their prices must remain competitive. This, alongside high interest rates, are some challenges that remain.

2. Infrastructure development with connectivity at the centre

Infrastructure remains a key priority, with strategic investments aimed at modernising the built environment and improving connectivity.

The budget allocates HK$3.7 billion to speed up the Northern Metropolis (NM) development, including infrastructure and public facilities in the Hetao Co-operation Zone.

The Northern Link railway project is moving forward, with Kwu Tung Station set for completion by 2027, and the main line expected by 2034.

The government is also examining the feasibility of modular integrated construction (MiC) supply chains in the Greater Bay Area (GBA) to make projects more efficient and sustainable.

Moreover, to manage construction costs, the government is considering policies to procure materials and products for public works itself.

This will be further enabled by aligning testing and certification standards (for example, MiC standards used in mainland China) within the GBA.

3. Emphasis on skills at the core of the city’s industrial strategy

The budget aligns closely with Hong Kong’s industrial strategy, which emphasises innovation, sustainability, and integration with the GBA.

There is a push towards a more skilled and technologically advanced workforce.

Initiatives such as the HK$15 million for the Centre of Excellence for Major Project Leaders and the HK$95 million for on-the-job training in construction clearly support this.

Additionally, the Construction Industry Council (CIC) is set to invest HK$150 million in subsidised training for engineering, architecture, and planning graduates, ensuring a pipeline of talent for the sector.

Challenges to implementation

Despite the budget’s ambitious plans, several challenges may prevent delivery.

A key concern is the financial strain posed by the ongoing fiscal deficit. Government spending continues to outstrip revenue, which could limit future public investment.

Global economic uncertainties, including a regional slowdown and geopolitical tensions, could also affect demand in Hong Kong’s infrastructure.

The construction sector also faces labour shortages and rising material costs, which could delay major developments.

Regulatory hurdles in land use and cross-boundary collaborations with the GBA further complicate the situation.

Preparing for a more resilient and sustainable future

The Hong Kong Budget 2025-26 reflects an attempt to balance short-term challenges with long-term economic priorities.

Its emphasis on land supply, infrastructure investment, and industrial strategy aims to reinforce Hong Kong’s position as a global financial and innovation hub – while addressing pressing housing and construction challenges.

By emphasising regional collaboration and workforce development, the government is setting the stage for a more resilient and sustainable built environment in the years ahead.

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