The pandemic has caused local consumption and e-commerce to rise, which in turn has increased demand for cold storage facilities, says Colliers.
The commercial real-estate service provider said the industrial sector has seen strong activity this year.
With exports up 33 percent in the first quarter, the industrial sector became the first to recover and the prices of logistics facilities have already rebounded.
The company also forecast that industrial assets will remain a hot pick for 2021.
"Vaccines, red wines and even artworks are kept in cold storage," said Rosanna Tang, Colliers head of research for Hong Kong and Greater Bay Area.
There has been a structural change in demand in the cold storage market under the pandemic.
She pointed out that retained imported frozen food for Hong Kong increased by 49 percent over the past three years, while online retail sales also expanded by more than 60 percent in the first quarter.
Benefiting from increasing demand for e-commerce and cold storage, industrial properties in the sub-sector recorded a quarter-on-quarter increase in prices of 1.9 percent to HK$4,630 per sq ft in the first quarter.
Tang said buyers were generally hard to come by in the cold storage market.
However, increasing interest from investors had seen long-term, safe and steady returns.
Meanwhile, cold storage exhibited a higher yield band of between 3 and 4 percent compared with traditional assets like office and retail where the capitalization rates were tracking below 3 percent.
Tang said a traditional warehouse could have a rental price range of between HK$10 and HK$16 per sq ft, with a capitalization rate of 2.9 to 3.1 percent.
But cold storage could enjoy rental returns from HK$15 to HK$20 per sq ft for leasing an entire block.
For strata-titled properties, the landlord could still receive rents of HK$13-$19 per sq ft.
The rental premium is about 20 to 25 percent higher than traditional warehouses. Prices are sustained by the limited cold storage supply, which creates stiff competition among end-users, Tang said.
Institutional investors have been entering the cold storage market one after another.
Angliss Hong Kong Food Service in Kwai Chung was purchased by HKBC Life (Property) for HK$325 million in July.
With a gross floor area of 61,280 sq ft, the property was sold at an average price of HK$5,295 per sq ft.
Angelo Gordon, the global alternative investment firm, also purchased the 291,697 sq ft Kai Bo Group Centre in the same district in March for HK$1.435 billion, or HK$4,919 per sq ft.
Despite the growing demand, the company saw a limited supply of new cold storage areas coming on the market.
There were 66 licensed cold storage areas in Hong Kong, which occupied a gross floor area of 5.4 million sq ft. Forty-three percent were in Kwai Chung, the largest among all districts in Hong Kong.
It was followed by Lantau with 17 percent and Sha Tin with 15 percent.
Tang said the Kwai Chung area is supported by the container terminal in the district, high-quality access to the airport and its central location in Hong Kong.
However, the company believed the rarity of cold storage areas made it a niche sector that attracts both local and institutional investors, who are eyeing their higher rental premium over that of typical warehouses.