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Weekly snippet | All eyes on industrial investment opportunities

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Hong Kong real estate investment was comparatively subdued in 2020, with institutional investors and funds adopting a safety-first approach and choosing to see out market uncertainty before committing any capital. Keeping a diligent view of the market, Colliers’ research identified industrial assets – specifically data centres and cold storage – and overall growth in activity in China as areas to watch at the start of the year.

As the first quarter of 2021 moves past the halfway mark, we’ve seen some of these indicators ring true with industrial investment seeing early signs of activity along with positive economic movement for Hong Kong against the back improved GDP performance in China. Providing a quick overview of what’s being witnessed on the ground, we hear from two of our leading brokers, Kitty Zhang, Assistant Manager, Industrial Services and Pureanae Jang, Valuation & Advisory Services, in this week’s snippet.

Industrial

Recently, working with major industrial landlords, we’ve seen an increase in activity from occupiers actively seeking properties, and from investors looking for assets or available land to purchase and redevelop. There is an increase in interest and intent from last year which provides optimism for the industrial sector, especially for assets that will provide a solution to Hong Kong’s needs of increased data storage and logistic solutions.

A good example can be seen with Goodman as they acquired half ownership of Seapower Industrial Centre (117,381 sq. ft.), an industrial building situated at 177 Hoi Bun Road in Kwun Tong with a purchase price of HK$570 million. This acquisition includes the ground floor, to fourth floor, accounting for 49% of the ownership. Most of the space will be used for cold storage, and the rest will be general warehouse solutions. Whilst Goodman is a leading manager of logistics and industrial properties in Hong Kong, all the buildings they previously owned are in the New Territories, with this being their first asset in the Kowloon district.

Valuation & Advisory Services

Link Asset Management Limited (Link), the manager of Link REIT, announced on 24 February that it has agreed to acquire 50% interest in Shanghai Qibao Vanke Plaza in Shanghai for RMB2.77 billion. According to the announcement, the monthly passing income of the Property (excluding management fees) was approximately RMB32.8 million, reflecting a gross initial yield of about 6.1%. The Property is a 5-storey commercial development plus a 3-storey basement located at Qibao Town, Minhang District in Shanghai. Completed in September 2016, it comprises a retail area of approximately 148,850m² and 1,471 parking spaces. The Property is directly connected to Qibao metro station and is a regional destination for commuters.

Shanghai has witnessed the fastest retail recovery from the COVID-19 pandemic among the four Tier 1 cities in Mainland China. According to the announcement, despite the pandemic, the property has a 97.8% occupancy rate as at end of December 2020. The Link’s acquisition shows strong investment confidence in China’s retail market. The EIU has projected Shanghai’s total retail sales of consumer goods will post an average of 5.2% annual growth between 2021 to 2023.

If you would like to know more about the market, or what options face you as a real estate professional or occupier in Hong Kong, don’t hesitate to contact our experts to see how we can help accelerate the growth of your business.


Related Experts

Kitty Zhang

Manager

Industrial Services

Hong Kong

Kitty has over 4 years experiences in industrial property leasing in Hong Kong Market, particularly in the representation of tenants who are aiming at expanding their business from Mainland China to Hong Kong or through Hong Kong to overseas. Most of time, Kitty play a role of link-bridge of the industrial demands between Hong Kong and Mainland China.

And she is specialized in providing wide range of one-stop services for the tenant and landlord to drive their business by strategic advices, financial analysis, especially by optimization of the leasing portfolio to find the optimum solution to match their requirements of setting new project, relocation or renewal from various type of industrial properties like multi-storey industrial buildings, ramp access warehouses and open storages with diversified use of properties such as logistics centre, e-commerce centre, data centre, pharmaceutical laboratories, vehicle repair shop, food production factory as well as studio.

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Pureanae Jang

Associate Director

Valuation & Advisory Services

Hong Kong

Pureanae Jang works as an Associate Director of Colliers' Valuation and Advisory Services in Hong Kong. Pureanae manages a team of eight, and her projects' geographic coverage spans across Asia Pacific, in particular Hong Kong, China and South Korea. She is commited to provide accurate and well-supported opinions of property value to assist her clients to reach their critical goal - to acquire the best asset, secure financing, close a sale, report to investors or identify unlocked potential of an asset.

Her specialisations include:

• Single-asset and Portfolio Valuations

• Appraisal Review / Management

• Discounted Cash Flow Analysis

• Feasibility Studies

• Highest and Best Use Studies

Having grown up in Mainland China and Hong Kong, Pureanae can speak, read and write in English, Japanese, Korean and Chinese. With her diverse background and effective cross-cultural communication skills, she is capable of delivering portfolio valuations on a global scale. She has completed various projects in Australia, Hong Kong, Indonesia, Japan, Korea, Mainland China, Mongolia, Northern Mariana Islands, Singapore, Taiwan and The United States.

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