While the recent tariff reductions have provided some relief in U.S.-China trade tensions, Hong Kong's logistics industry continues to grapple with the structural impacts of global supply chain realignment. The first quarter of 2025 saw resilient trade performance with both imports and exports showing growth, yet logistics operators remain cautious. This prudence has contributed to rising warehouse vacancy rates and modest declines in both industrial property rents and prices, according to Savills in its Market in Minutes – Hong Kong Industrial Sales and Leasing report of May 2025.
- Trade Recovery: Q1 saw imports and exports grow 5.7% and 6.6% YoY respectively, with air cargo volume up 3.4% and container throughput rebounding 2.1%.
- Logistics Sector Caution: 3PLs now demand verified Bills of Lading and Letters of Credit for warehouse expansion, freezing most expansion plans, seeing minimal significant relocation deals in the sector.
- Vacancy Rates Climb: Overall and modern warehouse vacancies rose to 7.6% and 9.2%, triggering approximately 1% rental corrections.
- Big-Ticket Transactions: Notable deals included Mapletree's HK$3.68 billion acquisition of the TYTL 202 logistics site (Tsing Yi) and the HK$253.6 million en-bloc sale of Capella HTR (Kwun Tong).
- Strata Sales Revival: Transaction volume jumped 23% QoQ to 702 deals, with 71% below HK$10 million - reflecting improved investor sentiment driven by stock market gains.
- LME Warehouse Expansion: LME authorized seven licensed warehouse facilities (across West Kowloon/Tsing Yi/Yuen Long), with operations commencing Q3 2025 to boost precious metals trading.
Mr. Jack Tong, Director, Research & Consultancy of Savills commented, “The US-China trade conflict has temporarily eased with reduced tariffs, but supply chain disruptions persist. Hong Kong's trade sector demonstrated resilience in Q1 2025, with rising imports and exports. However, the logistics industry is adopting cautious strategies, affecting expansion plans and increasing vacancy rates amid fluctuating investment sentiment.”
Mr. James Siu, Deputy Managing Director, Head of Kowloon of Savills said, “Investment sentiment showed tentative improvement in Q1, buoyed by stock market stabilization and lower financing costs, only to be dampened again by subsequent global market corrections. Amid this volatility, industry players have adopted a wait-and-see approach, which is expected to lead to reduced transaction volumes and exert additional downward pressure on industrial asset prices in coming quarters.”
Mr. Oscar Chow, Senior Director, Deputy Head of Industrial & Kowloon Commercial Sales of Savills said, “In the near term, the logistics industry will continue facing dual pressures from supply chain fragmentation and shifting consumption patterns. While the establishment of LME warehouses presents new opportunities, persistent global trade policy uncertainties necessitate long-term structural adaptation.”