Warehouses sole bright spot for rental growth, but not for long
Among all sectors of Hong Kong's property market, warehouses was the only one that recorded any sort of rental increment in the first quarter of this year.
However, while extremely low vacancies are still supporting the sector, the gradual softening of logistics demand due to slower growth in retail sales might mean more moderate rental growth in the short run, consultants said.
Warehouse rents rose 2.8 per cent in the first quarter, Savills said.
Rental growth was mainly driven by warehouses in peripheral areas, such as Tuen Mun and Yuen Long, where rents were playing catch-up, with virtually no vacancies during the quarter, a recent Savills report said.
CBRE said industrial leasing demand remained solid and was focused on large premises.
It said demand was partly driven by tenants that had been squeezed out from industrial premises under the government's revitalisation scheme.
But it expected rental growth for warehouses to be relatively modest after rising for 19 consecutive quarters.
The vacancy rate for warehouses tightened to 0.6 per cent at the end of the first quarter, the lowest since the first quarter of 2011.
Vacancies remained low despite Hong Kong's lacklustre trade performance, with combined January and February exports declining 0.8 per cent from the same period last year and imports rising 1.4 per cent.
After rising a combined 6.7 per cent in the first two months of the year, retail sales in Hong Kong fell 1.3 per cent year on year in March.
In the first quarter, Savills said, the largest warehouse leasing deal was completed in Tuen Mun, where a German logistics firm leased UTI Logistics Centre for about HK$1.95 million.
The facility has a gross floor area of about 168,000 sq ft, and the gross rent is about HK$11.60 per square foot, a new high for a logistics property in the area.