Cross-Sectoral Influence, Planning Policy, and Industrial Property Market in a High-Density City: A Hong Kong Study 1978–2012

Abstract

Why did Hong Kong property developers continue to produce a large amount of new industrial accommodation despite the city exhibiting a strong trend of deindustrialization since the late 1970s? This study addresses this question by examining a longitudinal cross-sectoral interaction between industrial and office property markets and its relationship with planning policy. It theorizes about the substitutability between industrial and office accommodation and hypothesizes that the use of new industrial premises by nonmanufacturing operators may be the answer. Using the methodology of Johansen cointegration and a vector error correction model, our estimations have found that industrial rent, price, and supply were influenced by both changing economic structure and office market parameters. Cross-sectoral influences between industrial and office property markets were confirmed.