Hong Kong's industrial sector pops the champagne on higher investment outlook

Sentiment has finally been revived.

It has been noted that investment sentiment in the industrial sector somehow rebounded in the second quarter.

According to a research note from Savills, this is all thanks to end users who have been looking for long term accommodation options for some time and are prepared to pay asking prices when suitable premises become available.

Nevertheless, while the possible softening of rents may put investors off, especially if they are also facing tighter credit conditions from banks, the lack of available stock may also make end users’ lives harder in finding suitable premises.

Savills expect volumes to shrink with prices probably remaining stable over the next six months.

Here's more from Savills:

“Investment sentiment revived in Q2/2015 with increasing end user demand. The leasing market was surprised by the sudden rise in warehouse vacancy as demand dwindled," said Simon Smith, Savills Research

The prolonged rally in the warehouse leasing market seems to be fi nally coming to a close with slowing
demand, escalating vacancy and more new supply coming on stream in the near term.

All these factors point to only one direction for rents, and inevitably warehouse landlords, who for many years have had the upper hand in negotiations, may face increasing pressure in the short run to make rental adjustments.