Tender closed for Smart and Green Mass Transit System in Kai Tak
The open tender for the Smart and Green Mass Transit System (SGMTS) in Kai Tak (Contract No. ED/2025/18) closed at noon today (August 14). The Government has received two tenders.
A spokesperson for the Government said, "The Kai Tak project is the first SGMTS in Hong Kong launched through open tender and the transit-oriented development (TOD) approach. We are pleased to see positive responses from the market with bids from consortia comprising enterprises from both Hong Kong and the Mainland, including companies with extensive experience in railway construction, public transport operation, and property development. This demonstrates that implementation of the SGMTS not only benefits the community but also fosters corporate collaboration and drives Hong Kong's economic growth."
The spokesperson added, "In addition to possessing experience in operating mass transit systems, tenderers are required to undertake the design and construction of the system infrastructure and acquire financial capacity to leverage property development for project financing. Given the multidisciplinary nature of the project, we invited local, Mainland, and international enterprises from various sectors to submit expressions of interest in August 2024 to gauge market interest and capabilities. We continued to engage the industry before finalising the tender requirements and launching the tender invitation last October."
The system is about 3.5 kilometers long with six elevated stations. The termini will be connected to the Kai Tak Cruise Terminal and the MTR Kai Tak Station respectively, with a view to providing a convenient feeder transport service between the former Kai Tak runway area and the MTR Kai Tak Station to strengthen connectivity among residential and commercial developments, tourism, culture and recreation, sports and community facilities within the area.
The Government has reserved the property development rights of three sites near the system (i.e. Kai Tak Area 4B Site 5, Kai Tak Area 4C Site 4 and Site 5 at the former Kai Tak runway area) to provide financial support for the project. Adopting a TOD approach allows the winning tenderer to formulate in a holistic manner an optimal plan taking into account the specific characteristics and needs of the Kai Tak Development Area, fostering synergy to unleash the area's development potential while boosting ridership for the SGMTS. In addition, having the same entity simultaneously advancing both the system and the property development on the three sites will enhance efficiency.
A two-envelope approach will be adopted in the tender assessment. A weighting of 60 per cent will be allocated to the assessment of the non-price proposal and 40 per cent to the price proposal. The Tender Assessment Panel will commence work on the tender assessment immediately, carefully evaluating both the non-price and price proposals from the tenderers to select the consortium with the highest quality, with a view to awarding the system contract within this year.
The Government has been adopting a dual-innovation approach on policy and technology to expedite the implementation of SGMTSs. Given the relatively straightforward alignment scheme at the Kai Tak Development Area, instead of the usual practice of completing the gazettal process before tendering, the gazettal and tendering processes were conducted concurrently. Combined with other innovative measures, this approach enables the project's target completion date to be advanced to 2031, three years ahead of the original estimate.
Source: AI-found images
Economic performance in second quarter of 2026 and latest GDP and price forecasts for 2026
The Government released today (August 14) the Half-yearly Economic Report 2026, together with the revised figures on Gross Domestic Product (GDP) for the second quarter of 2026.
The Government Economist, Ms Irina Fan, gave an account of the economic performance in the second quarter of 2026 and the latest GDP and price forecasts for 2026.
Main points
The Hong Kong economy continued to expand robustly in the second quarter of 2026, underpinned by buoyant external trade and resilient domestic demand. Real GDP grew by 4.3% in the second quarter over a year earlier, following 5.9% growth in the preceding quarter. For the first half of 2026, real GDP grew by 5.1% over a year earlier, the strongest half-yearly performance in nearly five years.
Total exports of goods accelerated, surging by 28.9% year-on-year in real terms in the second quarter, thanks to the robust trade flows driven by strong global demand for artificial intelligence (AI)-related electronic products. Exports of services expanded solidly by 3.4% in real terms over a year earlier, with all major service groups continuing to expand.
Domestic demand remained resilient across consumption and investment. Private consumption expenditure expanded for the fifth consecutive quarter and rose solidly by 2.8% in real terms in the second quarter over a year earlier. Overall investment expenditure rose further by 4.4% in real terms over a year earlier, underpinned by a further visible increase in private sector investment spending.
The labour market remained stable in the second quarter. The seasonally adjusted unemployment rate held steady at 3.7%, same as the preceding quarter. The underemployment rate also remained unchanged at 1.6%. Average employment earnings continued to grow over a year earlier.
Asset market conditions in Hong Kong in the second quarter were broadly supportive of both consumption and investment sentiment. The residential property market extended its positive momentum in the second quarter, with buoyant trading activity and further increases in overall flat prices. As for the local stock market, while the market saw fluctuating movements and the Hang Seng Index (HSI) closed the second quarter lower than at end-March, trading activity remained vibrant, with average daily turnover rising visibly by over 20% in the second quarter over a year earlier. Meanwhile, fund-raising activities through initial public offerings (IPO) were vibrant. These reflected investors' enthusiasm for frontier technology and AI-related assets. Going into the third quarter, the HSI recouped some lost ground to close at 25 440 on August12.
Consumer price inflation rose slightly but stayed moderate. The underlying Composite Consumer Price Index (Composite CPI) rose by 1.7% in the second quarter over a year earlier, accelerating from 1.4% in the preceding quarter, driven mainly by a sequential increase in fuel-related components following elevated international oil prices since late-February. Price pressures in other components remained largely subdued.
Looking ahead, the Hong Kong economy should see solid growth in the second half of 2026. The vibrant global demand for AI-related electronic products is expected to continue supporting Hong Kong's merchandise trade performance, and related logistics services should benefit from this momentum as well. Exports of services are also expected to benefit from sustained growth in visitor arrivals, alongside steady demand for financial and business services in Hong Kong. Domestic demand is expected to stay firm, supported by stable labour market conditions, and solid business and consumer sentiment. Nonetheless, external headwinds persist. Geopolitical tensions in the Middle East remain fluid, with potential spillovers to energy markets and global inflation. Inflation dynamics in major economies, the policy trajectories of major central banks, and trade protectionism among advanced economies warrant close attention. Risks associated with the rapid expansion of global AI investment also require monitoring.
Taking into account the stronger-than-expected actual outturn in the first half of the year and the near-term outlook, the real GDP growth forecast for 2026 as a whole is revised up to 3.5% – 4.5%, from 2.5% – 3.5% in the May round of review. The Government will continue to closely monitor the situation.
On the inflation outlook, consumer price inflation is expected to rise in the coming months as the earlier surge in international oil prices continues to feed through. The lingering geopolitical tensions in the Middle East have increased the uncertainty of inflation outlook. Meanwhile, price pressures in other areas remain largely contained, which should keep overall inflation at a moderate level. Taking into account the actual inflation outturn in the first half of the year and the factors mentioned above, the forecasts for the underlying and headline consumer price inflation rates for 2026 are maintained at 2.5% and 2.6% respectively, same as those in the May round of review.
Details
GDP
According to the revised figures released today by the Census and Statistics Department, real GDP grew by 4.3% year-on-year in the second quarter of 2026 (same as the advance estimate), following 5.9% growth in the preceding quarter. On a seasonally adjusted quarter-to-quarter comparison, real GDP fell somewhat by 0.6% in the second quarter (same as the advance estimate), having increased visibly by 2.9% in the preceding quarter (Chart).
The latest figures on GDP and its major expenditure components up to the second quarter of 2026 are presented in Table 1. Developments in different segments of the economy in the second quarter are described below.
External trade
Total exports of goods saw accelerated growth of 28.9% year-on-year in real terms in the second quarter, up from 23.8% in the preceding quarter. The strong export growth was underpinned by robust trade flows, driven by strong global demand for AI-related electronic products. Analysed by major market and with reference to external merchandise trade statistics, exports to the Mainland continued to register double-digit growth. Exports to Association of Southeast Asian Nations markets sustained their momentum and accelerated, and those to many other Asian economies also expanded at a faster pace. Exports to the United States grew markedly, and those to the European Union recorded solid growth. On a seasonally adjusted quarter-to-quarter basis, total exports of goods rose notably further by 7.0% in real terms in the second quarter.
Exports of services expanded solidly by 3.4% in real terms in the second quarter over a year earlier, after rising by 3.3% in the preceding quarter. Exports of all major service groups continued to expand. Specifically, exports of transport services, financial services, and business and other services recorded accelerated growth, supported by vibrant performance in cross-boundary traffic and financial service activities. Exports of travel services continued to expand, driven by solid growth in inbound tourism. On a seasonally adjusted quarter-to-quarter basis, exports of services increased by 1.2% in real terms in the second quarter.
Domestic sector
Private consumption expenditure rose solidly by 2.8% in real terms in the second quarter over a year earlier, after an increase of 4.9% in the preceding quarter and recording the fifth consecutive quarter of expansion. All major categories of consumption expenditure in the domestic market increased in the second quarter compared with a year earlier. On aseasonally adjusted quarter-to-quarter basis, private consumption expenditure rose by 0.6% in real terms in the second quarter. Meanwhile, government consumption expenditure was broadly unchanged in real terms in the second quarter compared with a year earlier, after rising by 2.8% in the preceding quarter. On a seasonally adjusted quarter-to-quarter basis, government consumption expenditure decreased by 1.9% in real terms in the second quarter.
Overall investment expenditure in terms of gross domestic fixed capital formation rose further by 4.4% year-on-year in real terms in the second quarter, though decelerating from 18.3% growth in the preceding quarter. The deceleration was mainly due to a slowdown in public sector expenditure on building and construction, which primarily reflected the lumpiness of milestone-based payments in the quarter. Private sector investment expenditure nevertheless stayed robust and increased visibly further in the second quarter, marking its third consecutive quarter of double-digit growth. Growth was supported by continued visible rise in expenditure on acquisitions of machinery, equipment and intellectual property products, further surge in costs of ownership transfer amid active property transactions, and a return to moderate growth in expenditure on building and construction, reversing its downward trend.
Labour sector
The labour market remained stable in the second quarter. The seasonally adjusted unemployment rate held steady at 3.7%, same as the preceding quarter. The underemployment rate also remained unchanged at 1.6%. The average monthly employment earnings of full-time employees (excluding foreign domestic helpers) showed sustained growth of 2.3% in nominal terms over a year earlier.
Asset markets
Asset market conditions in Hong Kong in the second quarter were broadly supportive of both consumption and investment sentiment. The residential property market extended its positive momentum in the second quarter. The number of transactions, in terms of the total number of sale and purchase agreements for residential property received by the Land Registry, rose visibly by another 19% over the preceding quarter to 22 156 in the second quarter, the highest quarterly level in fourteen years, and markedly higher than a year ago by 32%. Overall flat prices went up notably further by 3% during the second quarter, translating into a year-to-date gain of 8%. Overall flat rentals also stayed resilient, rising by another 2% in the second quarter.
The local stock market saw fluctuating movements in the second quarter. The HSI closed the quarter at 22 881, 7.7% lower than at end-March. Nonetheless, trading activity remained vibrant, with average daily turnover rising visibly by 21.8% year-on-year to $289.5 billion in the second quarter. Meanwhile, IPO fund-raising activities were vibrant. These reflected investors' enthusiasm for frontier technology and AI-related assets. Going into the third quarter, the HSI recouped some lost ground to close at 25 440 on August 12.
Prices
Consumer price inflation rose slightly in the second quarter, driven mainly by a sequential increase in fuel-related components following elevated international oil prices since late-February. Price pressures in other components remained largely subdued, keeping overall inflation at a moderate level. The underlying Composite CPI rose by 1.7% in the second quarter over a year earlier, accelerating from 1.4% in the preceding quarter. Including the effects of the Government's one-off relief measures, the headline Composite CPI rose by 1.9% year-on-year in the second quarter, up from 1.6% in the preceding quarter.
Latest GDP and price forecasts for 2026
Looking ahead, the Hong Kong economy should see solid growth in the second half of 2026. The vibrant global demand for AI-related electronic products is expected to continue supporting Hong Kong's merchandise trade performance, and related logistics services should benefit from this momentum as well. Exports of services are also expected to benefit from sustained growth in visitor arrivals, alongside steady demand for financial and business services in Hong Kong. Domestic demand is expected to stay firm, supported by stable labour market conditions, and solid business and consumer sentiment. Nonetheless, external headwinds persist. Geopolitical tensions in the Middle East remain fluid, with potential spillovers to energy markets and global inflation. Inflation dynamics in major economies, the policy trajectories of major central banks, and trade protectionism among advanced economies warrant close attention. Risks associated with the rapid expansion of global AI investment also require monitoring.
Taking into account the stronger-than-expected actual outturn in the first half of the year and the near-term outlook, the real GDP growth forecast for 2026 as a whole is revised up to 3.5% – 4.5%, from 2.5% – 3.5% in the May round of review (Table 2). The Government will continue to closely monitor the situation.
On the inflation outlook, consumer price inflation is expected to rise in the coming months as the earlier surge in international oil prices continues to feed through. The lingering geopolitical tensions in the Middle East have increased the uncertainty of inflation outlook. Meanwhile, price pressures in other areas remain largely contained, which should keep overall inflation at a moderate level. Taking into account the actual inflation outturn in the first half of the year and the factors mentioned above, the forecasts for the underlying and headline consumer price inflation rates for 2026 are maintained at 2.5% and 2.6% respectively, same as those in the May round of review (Table 2).
The Half-yearly Economic Report 2026 is now available for online download, free of charge at www.hkeconomy.gov.hk/en/situation/index.htm.The Report of the Gross Domestic Product by Expenditure Component, which contains the GDP figures up to the second quarter of 2026, is also available for browse and download, free of charge on the homepage of the Census and Statistics Department, www.censtatd.gov.hk.
