The Salvation Army got systems at the Tung Chun Industrial Building in Kwai Chung (Image: JLL)
Storage facility leas in Hong Kong decreased 0.5 percent year-on-year in the 3rd quarter of 2023 as logistics require continued to lessen and storage facility renters avoided actively looking for growth chances, according to Savills.
The Asian financing center’s logistics sector has actually had a hard time in current months, with imports and exports falling 2.8 and 6 percent year-on-year respectively in the July-to-September duration, the firm stated in its newest commercial sales and renting report. Air freight throughput rebounded with a 7.6 percent increase in the quarter, container throughput toppled 13.4 percent.
High rates of interest and associated financing expenses have actually made it progressively challenging for ending renters to validate movings for cost-saving functions, with third-quarter leasing activity mainly concentrated on lease renewals instead of brand-new acquisitions, Savills stated.
“The leasing market continued to see weak need with movings difficult to come by,” stated Jack Tong, director of research study and consultancy for Hong Kong at Savills. “Rate of take-up of freshly finished storage facility would determine the rate of healing of the sector over the next 12 months.”
Cainiao Duty-Free Bust
Total storage facility job saw a minor boost to 3.7 percent in the 3rd quarter as modern-day storage facility job held constant at 3.5 percent, the report stated.
Joe Tsai, chairman of Cainiao and executive vice chairman of Alibaba
The conclusion of Alibaba’s Cainiao Smart Gateway logistics complex at Hong Kong International Airport, which uses 4.1 million square feet (380,902 square metres) of lettable location, was spoiled by the collapse of a rumoured leasing handle a duty-free operator, contributing to the sector’s supply overhang.
With industrial home mortgage rates varying from 6.7 to 7.7 percent, home financial investment has actually ended up being less appealing and just end-users have actually revealed interest in the market, according to Savills. As an example, the Salvation Army just recently purchased systems for self-use throughout a number of floorings of the 1981-vintage Tung Chun Industrial Building in Kwai Chung for HK$ 122 million ($15.6 million).
“The high expense of funds continues to constrain the sales market, resulting in additional constraints on deal volume,” stated James Siu, deputy handling director and head of Kowloon commercial advancement and financial investment at Savills. “Positive check in the financial investment market might just be observed when rate of interest start to decrease, which is prepared for to happen around completion of 2024 or early 2025.”
E-Commerce Boost
In spite of frustrating retail sales and external trade, continual development in e-commerce is most likely to supply some assistance to Hong Kong’s logistics sector in the coming months, according to Savills.
Storage facility proprietors dealing with renter expirations in the next 2 years are seen revealing versatility with rental terms to preserve tenancy, provided the shortage of brand-new logistics need.
“The market is anticipated to resume development from 2025 onwards as brand-new storage facility conclusions slowly end up being occupied and China’s economy totally recuperates, bringing more supply chain services back to the nation, with Hong Kong benefiting considerably,” Savills stated.