Hong Kong's plan to offer around 74 million square feet of logistics supply in the Northern Metropolis is around 1.5 times the city's existing stock, which may outpace the market's ability to absorb, property services firm CBRE warned.
While replacement and consolidation are necessary for the logistics industry going forward, absorption is uncertain in the short term, said Eddie Tsui, valuation & advisory services senior director at CBRE Hong Kong.
Tsui said the current demand growth is structural, not exponential. While e-commerce, cold chain, and cross-border trade underpin demand, their business expansion remains selective and cost-sensitive, he said in a report in response to the government announcements on Hung Shui Kiu Industry Park Company establishment and modern logistics cluster study results.
Such a large supply may put pressure on rents, land values, and investment appetite, he said.
Tsui suggests the government adopt a transitional, market-responsive approach, such as allowing flexibility on initial plot ratios through a ‘pay what you build’ model with future gross floor area uplift, which could reduce early-stage risk while preserving long-term development optionality.
CBRE Hong Kong’s head of valuation & advisory services Hannah Jeong said the role of the newly established Industry Park Company overlaps in several areas with the Hong Kong Science and Technology Parks Corporation, creating a risk of duplication unless mandates and interfaces are carefully delineated.
Flexibility in development models such as public-private partnership and build–operate–transfer is welcome, but without clarity on tenure, exit arrangements and returns, the pool of investors willing to commit long-term capital may remain limited for the leasehold land, Jeong said.
Getting the commercial mechanics right will be just as important as policy intent, she added.
