Colliers International, Hong Kong

Asia Pacific Remains the Growth Leader
With Hong Kong Industrial Land Prices Topping the World

Industrial real estate has started to feel the impact of the global slowdown, with many regions registering very sluggish growth.  The Asia Pacific region continued to be the growth leader both in country growth rates and in the industrial real estate sector.  This is according to the Mid-year 2008 Highlights of Global Industrial Market released by Colliers International. 

According to the global ranking which features 166 industrial markets in the world, the highest land value was found in Asia Pacific.  The prime industrial land prices in Hong Kong topped in Asia Pacific as well as the globe at US$1,023.75 (HK$7,985.25) per sq ft as at the end of June 2008, followed by those in Seoul and Tokyo’s Ariake submarket at US$624.94 per sq ft and US$415.52 per sq ft respectively.  Taking into account of plot ratio, the accommodation value of industrial sites in Hong Kong was about US$107.76 (HK$841) per sq ft in Hong Kong.  In terms of industrial warehouse rents, London’s Heathrow submarket registered the highest record in the world at US$26.92 per sq ft per year. In terms of industrial warehouse rents, London’s Heathrow submarket registered the highest record in the world at US$26.92 per sq ft per year.

Asia Pacific
Similar to the Global Industrial Report released in March, Asia Pacific enjoyed the highest growth in the first half of 2008, with China and India leading the way.  This trend is expected to continue for the balance of 2008 and into 2009, although the Asia Pacific region will post slower growth amid the global economy slowing.  Port cities in the region are very active as intra-regional trade remains relatively robust.  Warehouse rents in the region vary significantly with Japan, Hong Kong, Seoul and Singapore all posting lease rates in excess of US$15.00 per sq ft per year.  In the region, the top three warehouse rents were found in Tokyo’s Ariake (US$25.87 per sq ft per year), Yokohama (US$19.93 per sq ft per year) and Urayasu (US$19.46 per sq ft per year).  Meanwhile, the prime warehouse rent in Hong Kong was ranked the fifth in Asia Pacific region at US$18.07 per sq ft per year. 

Wayal Chiu, Director of the Industrial Department in Colliers International, commented that there is sustained demand for quality warehouses in Hong Kong, especially those situated at prime locations where well-established infrastructure and port are nearby.  With the geographic proximity to and close business relationship with China, the impact of the global slowing economy on the Hong Kong industrial market is relatively less direct and significant than the other regions such as Europe and America.  As the market in China is in a developing stage, Hong Kong continued to act as a stepping stone to enter the growing China market.  For example, individual foreign-based logistics companies recently expanded their businesses in Hong Kong.  With the sustained occupational demand and anticipated strong growth in China, industrial rent in Hong Kong is expected to maintain its upward trend at a moderate rate. 

Europe, Middle East, Africa (EMEA)
In the first half of 2008, the Euro-zone and the UK saw very sluggish economic growth.  European warehouse markets continued to show steady growth, but down from 2007 levels.  Individual submarkets, including Spain, The Netherlands, Austria, Belgium, Sweden, Denmark and the UK are anticipated to see higher yields (lower prices) in the coming months. 

However, other locations in the region are expected to leave yields steady and possibly decline in some cases.  Registering the most expensive industrial warehouse rents, the prime land price of London’s Heathrow submarket is also the highest in the EMEA region at US$160.15 per sq ft. 

North America
The US and Canadian warehouse markets were more sluggish in the first half of 2008, compared with 2007.  Relatively, Canadian markets, particularly those in western Canada, continued to operate above trend in the region.  In the US, the cooling economy and the depressed housing sector are expected to filter through the market and the leasing activity is expected to slow.  However, the strong fundamentals in North America are anticipated to underpin the market with rents seeing steady growth or only marginal decrease in the coming months. 

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About Colliers International

Colliers Macaulay Nicolls Inc. (CMN) operating as Colliers International is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 293 offices in 61 countries.  In Asia Pacific, Colliers has 62 offices in 15 countries.  Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research.  Colliers International is a worldwide affiliation of independently owned and operated companies.  Locally, Colliers professionals serve clients in Hong Kong.

Contact Information

May Chow        
Regional Manager
Communications and PR, Hong Kong Marketing
Colliers International (Hong Kong) Ltd
Tel    852 2822 0736
Fax   852 2868 5275
Email: May.Chow@colliers.com

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