Sustainable development urged for logistics sector

As retail market is expected to grow.

The strong retail market is expected to remain a key demand driver for warehouse space in Hong Kong and the recently reported slowdown in growth momentum will unlikely leave a permanent dent on long-term warehouse demand.

According to a release from CBRE, despite this there is limited action to tackle the shortfall in the short-term.

Not one industrial site is up for auction/tender on the 2014/15 Land Application List and the minimal land targeted for broader release, specifically in Tuen Mun, will likely not result in new buildings for many years to come.

Here’s more from CBRE:

The need for more warehouses is critical not only to contain spiraling costs but also to ensure that new supply delivered is of a better quality to keep pace with modern logistics requirements, especially for high turn-over and high-value products.

In recent years, many sophisticated global logistics developers have been growing their portfolios across mainland China but all find it difficult to build new and high-specification warehousing in Hong Kong due to a lack of land resources and the high cost of development if land does become available.

This has left Hong Kong behind many Chinese cities in terms of logistics hardware availability.

Marcos Chan, Head of Research, CBRE Hong Kong, Macau and Taiwan commented, “At present, rental rates in Shenzhen are typically around 1/3 of that in Hong Kong on a per sq. ft. basis factoring in better cubic capacity.

This differential is in most cases still not enough to encourage occupiers to go across the border for local distribution taking into account the challenging yet improving customs procedures and the time and distance to reach retail locations.

However, if space availability in Hong Kong remains so limited, retailers and logistics operators may well be left with little choice but to relocate part or all of their options from Hong Kong.”

The next decade will see Hong Kong continuing to develop as a premium location for trade and tourism within the Greater Pearl River Delta mega-metropolis.

Hong Kong must leverage the upcoming metamorphosis of the Pearl River Deltaeconomy.

More shopping malls and more hotels will be required and the territory must prepare a better blueprint for its future logistics sector development to complement the growth of its hospitality and retail industries, and maintain its presence as a trading and logistics hub.