Shortage of warehouse space in Hong Kong likely to continue

Despite its position as a regional logistics hub, Hong Kong’s lack of industrial land and a resulting warehouse shortage have long been headaches, with the warehouse vacancy rate remaining below 2 per cent and unlikely to improve much next year.

A slowdown in retail sales led to a slight easing in demand for warehouse space this year, but new supply is extremely limited.

Warehouse vacancy ratesdeclined to 1.7 per cent in the third quarter of this year, from 1.9 per cent in the second, according to property consultancy Savills, picking up from near zero last year.

No industrial site is listed for auction or tender on Hong Kong government’s 2015-16 land sale programme and only one of the 36 plots sold in 2014-2015 was industrial land.

“There will be no large supply of industrial land in the next two to three years; the shortage will continue,” said Thomas Lam, head of valuation and consultancy at Knight Frank.

Lam said a softening in retail sales due to a decline in demand from mainland visitors had only had a limited impact on the demand for storage space.