Hong Kong industrial price growth to slow to 3-5% in 2022

But rents could rise by up to 6%.

As lockdowns loom anew following the Omicron outbreak, global supply chains face major disruptions again, especially the sea freight segment. Nevertheless, Savills says the gradual take-up of Hong Kong’s Goodman Westlink in Tuen Mun, which saw Goodman portfolio’s “in-house” tenants such as DHL and Zuellig Pharma all pre-committing to 1.5 million sq ft of space in this brand-new modern warehouse, has removed a major market overhang in 2022. 

Here’s more from Savills:

As such, we expect warehouse landlords to continue to have the upper hand in negotiations and will be able to raise rents by 5% to 6% in 2022. 

While industrial investment sentiment paused in the last quarter of 2021, funds and investors remain keen on this niche segment, which is still the highest yielding sector in Hong Kong. 

With the US Fed indicating a possible rate hike in early 2022 to tackle inflation, the rise in the cost of capital may test investment interest in 2022. We are therefore more cautious about industrial and warehouse price growth, which may slow to 3% to 5% in the coming year.