• Investors are turning their attention to non-traditional locations & prices can be expected further over 2017

    23 May 2017

    (23 May 2017, Hong Kong) Savills has released the latest briefing on the industrial sales and leasing.

    Click the image to download the research of Industrial sales and leasing from Savills.


    Sales Market

    The sales market was active with six en-bloc deals of over HK$200 million concluded in Q2, three of which were in Sai Kung and all sold to the same investor, Mr. Tang Shing Bor, for long-term residential redevelopment. The two industrial buildings originally owned by Four Seas were reported to be leased back to Four Seas for office and storage use for one more year, while the Price-rite Group has just renewed their lease in the other building for another three years, suggesting that in 1 to 3 years’ time some 200,000 sq ft of general storage displacement demand will come to the market.

    While Zung Fu will also lose their Wong Chuk Hang service centre due to the sale of the premises, as the company purchased Safety Godown in Chai Wan late last year the centre can easily be relocated to their new premises. With investment sentiment remaining robust, industrial prices increased by 3.2% in Q1/2017.  The market has now been rising consistently year-on-year since 2009.


    Leasing market

    Tsing Yi attracted the lion’s share of leasing market activity in Q1 given that most new modern warehouses are located on the island. The last whole floor of Mapletree Logistics Hub Tsing Yi (around 144,000 sq ft) was leased to a pharmaceutical company as a temperature-controlled logistics hub for both their local and regional businesses. The company is relocating from HIT. China Merchant’s new logistics centre in Tsing Yi, which is expected to obtain OP towards the end of Q2, was also rumored to have leased its lowest four floors (600,000 sq ft) to a multinational logistics operator who is consolidating from elsewhere in Hong Kong. It was also reported that China Merchants will reserve the next four floors (also around 600,000 sq ft), which are fully renovated for cold storage / temperature-controlled usage, for their own use. This means that of the 1.7-million sq ft new logistics centre, only the top two floors (around 300,000 sq ft, plus some office floors on top) will be available for lease before completion, alleviating the largest supply overhang in the market this year.

    Simon Smith, Senior Director of Research and Consultancy Services, Savills, said, “Looking ahead, the dramatic decline of vacancy from 100% to 20% in the soon-to-be-completed China Merchants logistics centre in Tsing Yi will come as a welcome relief for most modern warehouse landlords, who are faced with another uncertain year in terms of tenant demand.”


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