Tender Closes for $1B Logistics Project in Hong Kong’s Kwai Chung

A government tender for an industrial site in Hong Kong’s New Territories closed on Friday, with international players Goodman, Mapletree and ESR said to have submitted bids for a chance to win the rights to build a logistics facility worth as much as HK$11 billion ($1.4 billion), according to sources who spoke with Mingtiandi.

The site, located at the junction of Mei Ching Road and Container Port Road South, less than 500 metres (546 yards) from the Kwai Chung customs house, is expected to bring in tenders in the HK$4.2 billion to HK$5.2 billion range, according to Alex Leung, senior director at CHFT Advisory and Appraisal.

Should a developer succeed in winning the bid for Kwai Chung Town Lot No. 531, it could build a logistics facility measuring up to 1.48 million square feet (138,000 square metres) on the site, according to earlier land sale documents. The plot is located less than a kilometre from Kwai Chung Container Terminal 7, which ranks as the eighth busiest container port in the world.

“The logistics industry is a very important part of the Hong Kong economy and makes significant contributions to (the) community,” said a spokesperson for the Transport and Housing Bureau in a statement announcing the tender in March. “With a view to promoting modern logistics development progressively, the government will continue to identify more suitable sites for the development of multi-storey modern logistics facilities, so as to strengthen Hong Kong’s role as a regional logistics hub.”

Logistics Hub

Spanning about 594,652 square feet, the industrial site in the Kwai Chung container port is about a 10-minute drive from both the Jordan MTR station in Kowloon, and the Tsuen Wan station in the New Territories. It is also about 7 kilometres (4.3 miles) across the bridge from the Kwai Tsing container terminals, located along the Rambler Channel on Tsing Yi Island.

With its proximity to the city’s container terminals, the site is limited to logistics use, said Leung, with the property approved for use in inventory management, consolidation and storage, according to the land sale documents.

The government arranged the tender for the the Kwai Chung parcel to replace a nearby logistics site in Tsing Yi which was withdrawn from the land sale programme in February of this year, and converted into a community isolation and treatment facility due to the fifth wave of the COVID-19 pandemic.

In comparison to the Tsing Yi plot, the site in Kwai Chung is smaller but in a marginally superior location, said Leung, who noted that once a developer wins full ownership of the site, it would likely build a modern logistics services center, which would “create synergy” with other cargo handling facilities in the area. China Resources Logistics also has a facility along Mei Ching Road, as does Hutchison Logistics.

Industrial Stays Hot

The Kwai Chung tender closed amid an upswing in Hong Kong’s industrial market, with transactions involving warehouses, data centres and manufacturing facilities having leapt 37 percent in the second quarter of 2022, compared to the same period a year earlier, to reach HK$9.2 billion, according to a report published by Colliers this past week.

The industrial surge was led by big-ticket deals in the city, including China Resources Logistics purchasing a pair of warehouses – one each in the New Territories’ Shatin area and in Chai Wan on Hong Kong Island – from Kerry Properties for a total consideration of HK$4.62 billion In May.

As one of Hong Kong’s traditional industrial hubs, Kwai Chung helped to contribute to the city’s second quarter deal total with fund manager Nuveen acquiring the Cargo Consolidation Complex at 43 Container Port Road in April for a reported HK$2.88 billion.