[ET Net News Agency, 8 July 2019] Real estate advisor Savills said industrial property
sales sentiment was subdued by external uncertainties in 2Q and deal volumes declined
significantly.
However, with vacancy remaining extremely tight (1.9% overall and 0.8% for modern
warehouses), the warehouse sector actually recorded a rental increase. Investment
sentiment is expected to remain cautious with the ongoing trade situation and the volatile
stock market, and volumes are expected to remain low while prices may hold up for another
few months.
Comparing with 1Q, industrial transaction values and volumes both declined by 10% and
59% respectively over 2Q, hitting a recent low for the total consideration at only HK$1
billion.
In fact, no en-bloc industrial transactions were recorded, with only three transactions
of over HK$100 million. However, industrial prices rose marginally (+1.7%) while warehouse
prices remained flat over 2Q.
In the leasing market, the trade conflict has translated into a decline in cargo
throughputs, with air and container throughputs falling by 6.0% and 7.7% over the first
five months of the year respectively.
This was the worst start to a year since 2016, when the US Fed started raising rates.
Although most logistics operators were still working on billings incurred in 1H/2019 with
their businesses remaining active, leasing transactions were hard to come by with many
tenants adopting a wait-and-see attitude, inducing most of them to renew their leases
rather than relocating or expanding.
"The impact of the US/China trade tensions has translated into declining cargo
throughput and retail sales, as well as fewer industrial sales and leasing transactions
over Q2/2019, with prices and rents remaining intact for the moment." said Simon Smith,
Senior Director, Research & Consultancy, at Savills.
"Despite the cooler industrial market, we saw at least 10 applications since the
inception of the 20% plot ratio relaxation policy for industrial redevelopment came into
effect in October 2018. Three applications have already been approved with a maximum plot
ratio relaxation, showing Government's intention to encourage such redevelopment. This
area is a key focus of investors right now." added James Siu, Deputy Managing Director &
Head of Kowloon Industrial, at Savills. (KL)