Warehouse rental growth in Hong Kong dipped to 1%

Blame it on sluggish retail and export sales.

According to Colliers International, in 2Q 2013, there are weakening signs in the performance of Hong Kong’s industrial property market. Warehouse rents have experienced a vibrant growth of 20% yearon-year over the past two years, but they started to taper in 2Q 2013.

It noted that the warehouse rental growth slowed to 1% quarter-on-quarter (QoQ) in 2Q 2013 from 5% QoQ in the preceding quarter.

Simon Lo, Executive Director of Research & Advisory, Asia at Colliers International explained that the slowing rental growth was due to the weakening performance in retail sales and total exports.

Although rental escalation eases a little, the expensive rents of prime warehouse properties have triggered a new round of relocation activities.

Lo says, “Tenants, who cannot afford soaring rents in prime premises in Kwai Chung, chose to relocate to other districts such as Tuen Mun and Yuen Long for cost savings, while those strong logistics companies have taken the prime spaces to consolidate their operations under one roof and enjoy improvement in operation efficiency.”