Cushman & Wakefield is optimistic about the medium to long-term shop rental market in Hong Kong. The Sha Ling Data Center will enhance Hong Kong's status as a data hub in the long run

The government today (25th) published the "Fiscal Budget," and the Managing Director of CBRE Hong Kong, Xiao Lianghui, expressed agreement with the government's decision to continue not selling general commercial land next year in response to market supply and demand conditions. As of the end of the fourth quarter of last year, the overall vacancy rate of Grade A office space in Hong Kong was approximately 20.3%. The suspension of commercial land sales allows the market to gradually absorb the current vacant space, which helps stabilize the office market. However, the government should regularly review market conditions and resell commercial land parcels at the appropriate time.

As for the Hong Kong Investment Corporation's collaboration with market capital to guide funds towards high-quality commercial property projects that align with Hong Kong's industrial positioning and connect projects with target industry enterprises, the overall direction is positive and aligns with market principles. This initiative not only improves the efficiency of project and enterprise connections but also provides more suitable projects for emerging industries such as innovation and technology and medical research, while injecting new demand into the commercial property sector.

The government is accelerating the promotion of artificial intelligence industrialization, encouraging the widespread application of artificial intelligence and its deep integration with various industries. In the long term, the demand for computing power in data centers will significantly increase, driving local absorption capacity for high-specification data center facilities.

Regarding the Sha Ling data center site, it offers over 2.5 million square feet of floor area, which is about 25% of the current total stock of approximately 10 million square feet of data centers in Hong Kong, representing a rare large supply in recent years. If the project is successfully approved later, it will provide high power capacity and infrastructure for the development of artificial intelligence in Hong Kong, which will help enhance Hong Kong's status as a data hub in the Greater Bay Area and Asia in the long run.

Additionally, the government proposed to align with the national shipping strategy, promote the upgrading of Hong Kong's international shipping center, accelerate the intelligence of the logistics industry, and expand the source of goods. Approximately 32 hectares of land will be reserved in the Hong Shui Qiao/Xia Cun new development area to develop a modern logistics circle, which will further consolidate Hong Kong's role as an international shipping hub. However, Xiao Lianghui believes that when the government builds modern logistics industrial parks, it should be market-oriented and enterprise-based, flexibly responding to the needs of enterprises and providing various incentives to attract businesses.

CBRE holds an optimistic view on the medium to long-term rental prices of retail shops in Hong Kong, believing that as policies are gradually implemented and the tourism industry further improves, retail shop rents will show more positive changes