Warehouse rents rise due to limited supply
Rising rents caused by limited supply and surging demand are threatening city's position, with government focused on new homes
Rents in Hong Kong's warehouse sector have shot up because of a shortage caused by robust retail demand, and the limited supply could eventually harm the city's competitiveness, according to industry players.
"Compared with four to five years ago, we see rents have gone up by almost 50 per cent," said Jacques Chan, general manager of US-based BDP International's Hong Kong and South China division.
BDP is a privately held, family-owned global logistics provider with annual sales exceeding US$2 billion.
While the government's focus is on building homes, industry players said more land would be needed for use by industry for their warehousing needs. This is true even if retail market growth slows if the government takes steps to limit mainland tourist numbers, since the warehouse supply situation remained tight, Chan said.
According to Savills, the warehouse sector was the only one which recorded any sort of rental growth among all property sectors in Hong Kong, with rents increasing by 2.8 per cent in the first quarter of 2014.
"Warehouse rent is expected to sustain a 5 per cent to 10 per cent growth over 2014 due to extremely tight availability [a vacancy rate of less than 1 per cent] and continuous demand from logistics operators," said James Siu, head of Kowloon industrial and commercial sales for Savills.