In the final quarter of 2025, Hong Kong's logistics property market witnessed a significant downturn, with rental values decreasing by 12.5% compared to the previous year. This decline is largely attributed to a subdued leasing environment and the ongoing trend of storage space consolidation among businesses. Consequently, the city's logistics vacancy rate reached its highest point since the onset of the pandemic, reflecting a challenging period for landlords in the sector.
During the referenced quarter, average rents in Hong Kong stood at $13.1 per square foot per month. This figure represents a 7.1% reduction from the $14.1 recorded in the first quarter of 2020. In stark contrast, Singapore, a key regional competitor, observed a cumulative rental increase of 17.2% over the same timeframe. Despite Hong Kong's rental depreciation, its logistics facilities remained more expensive than Singapore's when measured in U.S. dollar terms. Current rents in Hong Kong were approximately $158.4 (US$20.20), while Singapore's equivalent was $131.72 (US$16.80).
A recent analysis by Cushman & Wakefield highlighted a growing divergence within Asia-Pacific logistics markets. The report indicates that nearly half of the region's markets (47%) are now considered tenant-favorable, an increase from 33% in 2025. This shift reflects an environment where tenants wield greater negotiation power. Looking ahead, about 43% of these markets are projected to see a reduction in vacancy over the next three years, while approximately one-third might experience further vacancy increases as new developments come online. Areas like Singapore, Japan, and Australia are expected to face heightened competition for available space due to existing supply limitations. Conversely, Mainland China and parts of India offer more advantageous conditions for tenants, as new supply continues to outpace demand. However, Mainland China is grappling with elevated vacancy levels, weakened occupier demand, and downward pressure on rental prices, with further increases in vacancy anticipated in the short term as additional inventory enters the market.
Across the Asia-Pacific region, demand for logistics spaces continues to be driven by sectors such as e-commerce, manufacturing, automotive, and high-technology industries. Furthermore, countries including Vietnam, Indonesia, and Thailand are attracting businesses seeking to relocate or diversify their production operations within the continent, contributing to a dynamic and evolving logistics landscape.
The latest market analysis underscores a period of adjustment for Hong Kong's logistics real estate, marked by falling rents and rising vacancy, albeit maintaining a cost premium over Singapore. This local trend mirrors a broader regional pattern where varying supply-demand dynamics are creating distinct market conditions, with some areas favoring landlords and others tilting towards tenants, influenced by factors like new construction, economic growth, and evolving supply chain strategies.