In 2024, the logistics sector in Hong Kong faced notable challenges, with rental prices showing a decline. According to a recent report from Knight Frank, Hong Kong's logistics rents dropped by 3.2% compared to the previous year, with a more pronounced decrease of 1.9% during the latter half of the year. This trend is expected to continue over the next 12 months, affecting not only Hong Kong but also other major cities like Beijing and Shanghai. The downturn in these markets can be attributed to various factors, including an oversupply of new developments and economic headwinds.

On a broader scale, while most cities in the Asia-Pacific region maintained relatively stable rental rates in the second half of 2024, the overall growth rate for the entire region slowed significantly. In fact, rent growth decelerated to just 0.2%, a stark contrast from the robust 7% increase seen in 2023 and the modest 2% gain in the first half of 2024. Notably, mainland Chinese markets experienced substantial declines, with Beijing and Shanghai witnessing rent drops of between 14% and 15%. However, some markets showed resilience, such as Melbourne, which saw a 6.7% increase due to limited land availability, and Greater Kuala Lumpur, where the introduction of high-quality industrial spaces boosted rental growth by 5%.

The future of logistics real estate may be shaped by geopolitical uncertainties. The possibility of increased tariffs under a potential second Trump administration could lead to significant changes in global supply chains. Logistics companies will need to navigate this complex landscape carefully, balancing cost management with strategic expansion. As Tim Armstrong, global head of occupier strategy and solutions at Knight Frank, pointed out, businesses must adopt a cautious yet opportunistic approach to ensure they remain competitive and adaptable in an ever-changing market environment.