As the Hong Kong government introduced the cooling measures in the residential market, investors change their focus to commercial properties. Thus, abundant capital flows to the office, retail property and car parking space markets, which the trend is anticipated to sustain this year. However, the industrial market has been being left behind.
According to the government’s statistics, the total industrial stock, including flattered factories, private specialised factories and warehouse was about 250 million sq ft as at the end of 2011, representing more than half of the total property stock (including office, retail and residential properties) in Hong Kong. In terms of sales transaction from January to November 2012, the total value of industrial property sales registered about HK$39.5 billion i.e. 24% of the total value of industrial and commercial sales transactions. Meanwhile, the average price of strata-title industrial property was about HK$5,000 per sq ft, representing a higher-than-expectation growth of 43% year-on-year (YoY).
Currently, the industrial market primarily relies on logistics industry, for which re-export volume is a direct indicator. The total value of Hong Kong’s re-exports increased 11% YoY to HK$300 billion in November 2012. Despite various uncertainties clouding the western countries, Hong Kong’s re-exports are not strongly affected as it does not totally depend on the Europe and US markets. In November 2012, Hong Kong’s re-exports to Europe and US composed 13% of the total, while that to China was 57%. Meanwhile, the growth potential of the emerging countries in Asia cannot be overlooked. Between January and November 2012, the growth of Hong Kong’s re-exports to Taiwan, mainland China and Vietnam were 34%, 20% and 14%, respectively.
Besides, the retail sales in the emerging countries in Asia also stimulate Hong Kong’s re-exports. The retail sales in Europe and the US edged up by just 0.8% in 2011, comparing to 4.6% growth in the Asia Pacific region. According to Economist Intelligence Unit’s forecast, the retail sales in Asia Pacific is projected to rise 6% in 2013, with China leading the region (11.2%) and the expected growth of Vietnam at 8.4% and Thailand, India, Indonesia and Malaysia at 4.9-5.9%.
In view of Hong Kong’s re-exports and logistics industry growth stimulated by the increase of Asia’s retail sales, the local industrial property market is expected to experience strong uptrend that leads the other property sectors.