Interest in industrial units falls from developers' agenda

Lack of building applications lodged in the first four months of the year reveals that property firms have no interest in developing industrial units, according to Midland Realty.

The property consultant said developers would rather build residential or commercial projects on industrial sites, citing approvals for new residential conversion of 6,680 units at present.

For instance, Shanghai Industrial Group's Tien Chu Centre in To Kwa Wan is being redeveloped into a 2,160-unit housing estate, while Wharf (Holdings) will demolish a factory in Western District for a 100-unit project.

Midland Realty, quoting Buildings Department statistics, said there had been no new applications for building plans of industrial properties in the first four months, while developers focused on previously approved projects.

With increasing industrial demolitions, the stock of industrial buildings has been decreasing at an accelerating rate since 1997. Industrial stock was 188 million square feet at the end of last year, down 2.2 per cent from 193 million sq ft at the end of 1997.

Demolition of industrial premises last year reached a five-year high, covering 2.14 million sq ft - higher than the combined 776,730 sq ft in the previous three years.

Industrial completions fell to 201,287 sq ft last year, 87.4 per cent lower than the 1.94 million sq ft in 1997. Midland Realty expected the industrial stock to continue falling as more factories are converted to residential or commercial properties.

Meanwhile, Colliers Jardine said the industrial property market had been uninspiring in the second quarter because of the drastic slowdown in the overall trade volume.

Average rental of factory premises decreased 3.3 per cent quarter on quarter to HK$5.58 per square foot a month as at end-May.

Warehouses were more resilient at HK$6.02 per square foot, representing 2.5 per cent quarter-on-quarter growth.

Industrial-office property rentals, in line with the traditional office sector, saw negative growth of 1.6 per cent in the past quarter to HK$9.37 per square foot.