The leasing market remained active in the fourth quarter with availability shrinking and landlords preparing to raise rents further.

• The continued recovery of the trading and retail sectors propelled sustainable growth in the local logistics sector, meaning logistics operators were keen to either renew or expand.
• Overall and modern warehouse rents continued to rebound by 1.4% and 2.7% in Q4/2021 respectively, while both overall and modern warehouse vacancy rates fell to 3.1% and 2.6% over the same quarter.
• Investment sentiment dipped in Q4 as changing Mainland policies, and a turbulent stock market have turned most investors cautious.  Nevertheless, the rental prospects of logistics assets and the redevelopment potential of industrial premises have continued to attract foreign funds and local investors to the industrial segment.
• The latest outbreak of Omicron and a possible lockdown of several major economies may bring along a new round of global supply chain disruption, which may be felt mostly by the sea freight segment.  Nevertheless, the gradual take-up of the Goodman Westlink in Tuen Mun has removed a major market overhang in 2022.
• While industrial investment sentiment paused in the last quarter of 2021, funds and investors remain keen on this niche segment, which is comfortably the highest yielding sector in Hong Kong.  With the US Fed indicating a possible rate hike to tackle inflation, the rise in the cost of capital may test investment interest in 2022.