Concrete Analysis | Why industrial real estate has become one of the most sought after asset classes in Hong Kong

Name: Intelligent sorting systems help China's JD.com cope with demand during Covid-19 pandemic
Uploaded: 2021-07-13T04:01:09.000Z
Duration: 2 min 20 s
Description: Intelligent sorting systems help China's JD.com cope with demand during Covid-19 pandemic

Hong Kong’s old industrial buildings have found a new lease of life amid demand for warehouses and data centres

Warehouse rents have risen 1.1 per cent quarter on quarter, contributing to a 3.5 per cent rental rebound in the first half

Reading Time:3 minutes

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Demand for cold storage warehouses in Hong Kong has risen amid robust supermarket sales and e-commerce food delivery. Photo: Shutterstock

John Davies

Published: 12:01pm, 13 Jul 2021Updated: 5:37pm, 13 Jul 2021

Supply and demand is an economic fundamental. It can be applied across multiple sectors, products and service offerings. But when looking at real estate and Hong Kong’s topography, there is no better demonstration of how constrained supply can support resilient demand.

Market conditions over the last 24 months have been unprecedented and tested the resolve of real estate stakeholders. However, while some sectors have found demand to be low – albeit in a traditionally supply-limited market – the industrial sector has thrived and found an ideal ecosystem that sees supply and demand favour owners and landlords.

This is best demonstrated in the latest figures, which show warehouse rents have increased 1.1 per cent quarter on quarter, contributing to a 3.5 per cent rental rebound in the first half of this year.

So, the question is why? To understand this, you need look no further than your own habits and consumer patterns. Our demand for a greater variety of better products, delivered faster, has pushed third party logistics providers to adapt, grow and innovate.

The same can be said for internet services, which in turn has driven a well-documented demand for data centres. And in terms of real estate, these factors have directly pushed the need for more storage, and logistical space – enter the demand for industrial assets.

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Intelligent sorting systems help China's JD.com cope with demand during Covid-19 pandemic

This demand is best demonstrated with cold storage. It has become one of the most sought-after niche asset classes in Hong Kong, triggered by the pandemic, robust supermarket sales and the doubling down of e-commerce food delivery, to store temperature-sensitive products. In addition, the imported frozen food industry has also seen an increase in volume of 49 per cent up to the end of 2020.

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.css-1m2rp1p{color:#34b8b5;}Concrete Analysis | Why industrial real estate has become one of the most sought after asset classes in Hong Kong

Concrete Analysis | Why industrial real estate has become one of the most sought after asset classes in Hong Kong