Prominent real estate advisor Savills pointed out that recent rate hikes and uncertainties over the US / China trade conflict have held back the industrial sales market in Q4; and modern warehouse rents rose by 2.1% with vacancy droping to a recent low of 0.5%. Tight availability and growing demand are expected to prop up the leasing market.
Prominent real estate advisor Savills pointed out that recent rate hikes and uncertainties over the US / China trade conflict have held back the industrial sales market in Q4; and modern warehouse rents rose by 2.1% with vacancy droping to a recent low of 0.5%. Tight availability and growing demand are expected to prop up the leasing market.
Q4 was a quiet industrial sales market in terms of both transaction volumes and values (-54% and -59% q-o-q respectively); and industrial prices have registered their first decline of 2.9% since end-2015 (when the US first increased interest rates). However, Q4 also saw modern warehouse rents climbing, as the already tight availability was made worse by displacement demand as tenants relocated to Tsing Yi. Overall warehouse prices remained flat over the quarter.
The significant data centre site tender in Tseung Kwan O (HK$4,500 per sq ft AV) is likely to boost industrial site prices with similar potential.
Mr. Simon Smith, Senior Director, Research & Consultancy said: “Displacement demand is filling remaining vacancies in modern warehouses, which is supporting rental values in this niche segment despite uncertain business prospects for 3PLs. With frontloaded logistics demand resulting from the trade conflict and displacement demand now past, the warehouse leasing market may be less active over the next few months.”
Mr. James Siu, Deputy Managing Director & Head of Kowloon Industrial said: “The ongoing US / China trade conflict led to the slump in en-bloc industrial deals, while the modern warehouse market should continue to benefit from extremely tight availability, as well as growing logistics demand from both the recovering retail segment as well as the emerging e-commerce market.”