Goodman bullish on Hong Kong as logistics hub but costs a concern
Hong Kong can still serve as a regional logistics hub despite the fast-growing mainland market, according to Philip Pearce, the managing director of Goodman Group's Greater China division.
"Hong Kong still has benefits over [mainland] China as it has a very good customs regime and it is still very efficient," Pearce said.
Hong Kong is a regional distribution centre, and no taxes are charged on goods coming into the city and distributed to other parts of Asia.
Because of that, Pearce said, Hong Kong was important.
Goodman is an integrated property group with operations in Australia, New Zealand, Asia, Europe, Britain, North America and Brazil, and it had a large portfolio in Hong Kong, Pearce said.
The company's landmark property in Hong Kong is its warehouse and distribution development, Goodman Interlink, in Tsing Yi, in the heart of the ports district and next to Stonecutters Bridge. The 2.4 million sq ft development, with 24 levels, was completed in January 2012.
"In Hong Kong, the majority of demand, based on our portfolio, is for domestic consumption," Pearce said.
However, he said rising costs could affect the city's status as a regional hub.
"Occupancy is 99.99 per cent. Basically, it is fully occupied. The result is rents going up," Pearce said, adding that land prices were also rising.
According to CBRE, warehouse vacancies remained at a low 0.5 per cent at the end of the third quarter. Steady demand and low vacancies continued to drive rents up, by 1.6 per cent from the second quarter.
The only new warehouse project this year was one by SF Express in Tsing Yi. In the next two years, the Mapletree and China Merchants developments, also in Tsing Yi, will be completed, providing 2.3 million sq ft of modern logistics space, according to CBRE.
However, the longer-term supply of quality industrial space is still considered insufficient.
The government recently announced the sale of an industrial site in Kwai Chung, with a gross floor area of 129,000 sq ft. CBRE said it would be the first industrial site sold by the government since September 2000.