Warehouse rents in Hong Kong rise amid tight supply and strong demand

Warehouse rents in Hong Kong rose 2.6 per cent to US$13.65 per square foot per year in the second quarter, but the rate of increase will slow in coming months, according to property consultant CBRE.

In a CBRE report on the global logistics market just released, Hong Kong was ranked the sixth most expensive market globally.

Tenants were experiencing difficulty finding space large enough to meet their specifications as demand remained robust amid strong cargo volumes and steady retail sales volumes from mainland tourists, the report noted. Available space was therefore almost fully occupied, with no new supply scheduled to come on stream until 2014.

But with tenants cautious about the economic outlook amid a weaker business environment and becoming more cost conscious, the recent rate of increase was likely to slow in coming months and rents will likely stabilise.

"We expect vacancy rates to remain very low as supply-side constraints continue to override the relatively weak business conditions," said Darren Benson, senior director of industrial and logistics services for Hong Kong, Macau and Taiwan.

"We therefore expect to see continued industrial rental rate increases into the next quarter but with the growth rate slowing marginally."