The demand for storage of commodities and art is providing a much-needed boost for Hong Kong’s logistics properties, where recovery has lagged behind other commercial real estate segments.
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New demand from the London Metal Exchange’s (LME) inclusion of Hong Kong in the exchange’s global warehousing network is helping the segment, where 11 licences have been issued to warehouse operators in the city.
“New space is being taken from that angle and that’s around 30,000 sq ft to 100,000 sq ft per licence,” said Samuel Lai, head of industrial and logistics at CBRE Hong Kong.
However, the transaction volume for logistics space in the city has fallen by 40 per cent to 600,000 sq ft per quarter from 1 million sq ft before the Covid-19 pandemic in 2020, signifying a cautious stance among operators, said Lai.
With an estimated 4 million sq ft of new logistics space coming on stream between 2028 and 2029, the segment was likely to see rents drop by another 2 to 3 per cent in the fourth quarter, dragging full-year rents down by 10 per cent, he added.
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