Logistics sector gets neglected in Hong Kong economy

Warehouse stock vacancy rates have been affected.

From a government policy perspective, Hong Kong’s industrial land sales for warehousing have been scarce, and this has led to little to no new supply over the past decade.

According to a release from CBRE, in addition, vast amounts of current industrial stock is being rezoned or revitalized to facilitate residential and commercial developments, further depleting available options for industrial occupiers.

“While the government has been proactive in recent times in replenishing domestic and commercial land supply, the industrial market, specifically for logistics use has been largely left out of the equation,” said Darren Benson, Executive Director, Industrial and Logistics Services, CBRE Hong Kong, Macau and Taiwan.

Here’s more from CBRE:

This lack of supply coupled with resilient demand has led to warehouse stock vacancy rates hitting a new low of 0.4% as of June 2014, decreasing from 1.1% at the end of 2013. Warehouse stock has only increased from 36.5 million sq. ft. at the end of 2004 to 38.3 million sq. ft. at the end of 2013, growing by only 5% in ten years.

“Slow growth in warehouse stock is due to a lack of government land tender sales for logistics usage,” said Benson.

“Over the last decade only four sites have been sold by the government, providing only 3.7 million sq. ft. of additional warehouse stock, and representing only 6.2% of the maximum floor space of all government land being auctioned or tendered during the period.”