The leasing market stabilises with minimal downsizing

• A handful of new lettings were recorded, although they remained limited overall. The new take-up was primarily driven by major Chinese e-commerce players.
• For example, Pinduoduo reportedly committed to 108,790 sq ft in Cainiao Smart Gateway at Chek Lap Kok. Cainiao Supply Chain, meanwhile, expanded by 77,402 sq ft in Hutchison Logistics Centre in Kwai Chung.

Overall vacancy holds steady at 7.9% in Q4 2024

• Negative net absorption shrunk to around 3,200 sq ft from around 144,100 sq ft in Q3 2024.
• There was no new supply of prime warehouses in Q4 2024. However, there are currently three industrial sites available for tender. They are in Hung Shui Kiu, Yuen Long South and Tsing Yi respectively. All tenders will be closed in Q1 2025.

Investment activities see a reversal in Q4 2024 following a slight rebound in Q3 2024

• The investment market witnessed a renewed contraction of investment volume in Q4 2024.
• Notably in the secondary market, Jolibee reportedly acquired two industrial buildings in San Po Kong from New World Development for HKD 987.0 million, translating into an estimated yield of 4%.

Outlook: Downward pressure on rents persist as vacant space accumulates

• The increasing likelihood of a yuan depreciation could partially offset pressure on Hong Kong’s trade performance with anticipated US tariffs. Warehouse expansion demand will remain limited in 2025.
• Capital values will likely stay on a downward trajectory alongside the falling rental in the coming year.