14 August 2012


During 2Q 2012, Hong Kong’s re-export as well as air cargo and container throughput stayed positive. Colliers International’s Industrial Research & Forecast Report 2Q 2012 stated that both industrial rents and prices registered growth in the quarter.

Hong Kong’s warehouse sub-sector continued to be underpinned by the local retail sales growth.  The sustained outsourcing activities have translated into solid demand from a group of third-party logistics companies, which is looking for warehouses with ramp access and size ranging from 30,000 to 50,000 sq ft.

In the factory sub-sector, as more landlords plan to vacate their industrial buildings in order to convert them for other uses, tenants in those buildings have to search industrial properties for relocation, which forms another source of demand stimulating the industrial leasing activity.

Amidst uncertainties in the global economic outlook, more tenants are on tight budgets that eventually hinder the growth rate of industrial rents. Compared to the increase of 1.5% - 4.7% quarter-on-quarter (QoQ) in rents in 1Q 2012, rental growth of industrial properties, including factory, warehouse with cargo lift access, warehouse with ramp access and I-O building, slowed to 1.2% - 4.0% QoQ in 2Q 2012. Amongst the four types of industrial properties, warehouse with ramp access registered the strongest rental growth of 4.0% QoQ due to limited stock availability and continued demand from logistics operators.

On the sales front, industrial strata-title sales transaction volume recorded notable surge in 2Q 2012.  Over the period from March to May 2012, strata-title sales transactions of industrial properties leapt 118% QoQ to HK$10,680 million in total turnover and 161% QoQ to 2,560 in the number of transactions.

“During the three months ending in May 2012, both the quarterly number and value of strata-title industrial sales transaction were all-time high since the record began in 1999. The solid buying demand came from both end-users and investors as the interest costs for acquiring and holding industrial premises were low,” said Simon Lo, Executive Director of Research and Advisory, Asia at Colliers International. 

Amidst the buoyant sales activity, the industrial price growth accelerated in 2Q 2012. Industrial property prices picked up the growth rate to 4.0% - 8.0% QoQ during the period between March and May 2012, compared to 1.5% - 4.7% QoQ in the preceding three months.

With price rise exceeding rental growth, industrial property yield between March and May 2012 dropped to 3.6%, which was a record-low level since 2000, according to the government’s statistics.

In view of the negative spill-over effect of Eurozone sovereign debt situation, Hong Kong’s export outlook is anticipated to remain challenging in the short term. Over the next 12 months, Colliers International expects Hong Kong’s industrial rents and prices to see a downward adjustment of 2% and 4%, respectively.

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