Hong Kong property

Tender sale of first logistics site in five years in Tuen Mun likely to fetch HK$2.56 billion

Aggressive bids likely by Chinese e-commerce companies and logistics firms

PUBLISHED : Wednesday, 25 April, 2018, 7:03am
UPDATED : Wednesday, 25 April, 2018, 7:03am

Chinese e-commerce and logistics companies are expected to submit aggressive bids for a large logistics site in Tuen Mun on Friday, the first the government has offered in the past five years through tender, according to industry professionals.

The 340,870 square feet plot on Siu Lang Shui Road opposite River Trade Terminal in Pillar Point, with a plot ratio of 2.5 times, is expected to yield a total gross floor area of 852,000 sq ft for a five-storey logistics centre.

The land could receive bids of as much as HK$2.56 billion (US$326.3 million) or about HK$3,000 per sq ft of gross floor area, which is about 30 per cent above the average price of industrial buildings, as prices of such buildings have been trending upwards in recent years, said Vincent Cheung, deputy managing director for Asia valuation and advisory services at Colliers International.

Demand for warehouse and logistics facilities is rising on the back of the rebound in Hong Kong’s retail sales and the growth in e-commerce, according to Colliers.

“There is competition between traditional logistics firms and e-commerce companies,” said Cheung.

He said logistics firms want to keep their industry market share, while e-commerce companies want to take control of the logistics part to control costs, increase the price competitiveness of goods sold on their platform, and reinforce the buying experience of customers by enhancing their logistics service quality.

“And of course the e-commerce companies also want to reinforce their [grasp of] big data for customer behavioural analysis by controlling the logistics of goods delivery.”

James Cheung, executive director of Centaline Surveyors, believes the price of land for logistics use in near future may stay at a relatively high level as “the logistics system is vital to Hong Kong’s economy and the supply of such land is not high”.

Meanwhile, asking prices for industrial buildings in Tuen Mun have increased. A 2,482 sq ft unit in Tuen Mun Industrial Centre at San Ping Circuit went for HK$5.3 million last Thursday, or HK$2,135 per sq ft, up 28.6 per cent from HK$1,660 per sq ft in September 2016, according to Centaline Property Agency.

The last logistics site the government put on tender was a plot in Tsing Yi back in 2013, which was awarded to Mapletree Investments, a subsidiary of Singapore’s Temasek Holdings, for HK$1.69 billion, 50 per cent higher than market estimates. Mapletree beat subsidiaries of Sun Hung Kai Properties, NWS Holdings and Goodman Group.