G.F. 323
51.
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A further reflection of the growth in demand in the private
25.
sector was that the amount of vacant factory space was less at the end of
1976 than at the end of any year since 1971. Vacant office space also
reflects this growth in demand. The stortage of office space in the early
seventies and excessive optimism about future increases in office rentals
led to a large share of property development being concentrated on the
building of more offices at that time. The consequence was an inevitable
over supply of offices starting as early as 1973 and developing in 1974
and 1975. But during 1976, there was a substantial
accommodation.
take up of office
Vacent office space by the end of 1976 was less than at
the end of 1975, despite a fairly large amount of additional office floor
space made available during the year.
Building and construction costs
52.
The fact that building and construction in 1976 was roughly
back to a level consistent with overall economic activity does not
necessarily imply that the property market was in equilibrium. If
continued growth in the demand for building and construction activity
exceeds the growth in the capacity of the building and construction
industry (as may be the case in the late seventies), prices are likely
to increase rapidly. Time lags in the system coupled with expectations
of further price increases will tend to exaggerate these movements.
53.
An indication of the movements in construction prices is
given in table 27 and diagram 8. The tender price index is constructed
from successful tenders for public building projects whereas the labour
and material cost index is a weighted average of the movements in prices
of construction materials and in construction wages. Although the two
indexes, being designed for a specific use within the Public Work Department,
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/must
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