Space for growth in Asia’s self-storage industry
Print Edition
Self-storage, an already mature and developed industry in the United States, the United Kingdom and Australia, is expanding rapidly in Asia, with demographic changes being major demand drivers, CBRE, the world’s largest commercial real estate services provider, said in a latest research.
Across the region, cities such as Tokyo, Hong Kong and Singapore are leading the trend as consumer demand remains strong, probably due to a number of drivers which include disruptive life events, urbanization and changes in business activities, according to the report.
In particular, the four “Ds” — death, divorce, downsizing and dislocation (job change, marriage, college or natural disaster) — as well as business activity (expansions and contractions) have been considered the key drivers for demand for self-storage space.
Due to low saturation, as measured by self-storage space per household, the self-storage market in Hong Kong, Singapore and Tokyo has rosy prospects and is set for fast expansion, CBRE’s study showed.
The self-storage space in the US stands at 2 square meters per household whereas the figure for Singapore, Hong Kong and Tokyo stays at merely 0.12 square meters, 0.1 square meters and 0.03 square meters per household, respectively, according to CBRE data.
While it is highly unlikely that Asian markets will reach the same level of penetration as developed markets such as the US due to factors such as population growth, growth in demand still seems apparent, the report said.
“Although there are significant opportunities for the growth of the self-storage industry in Asia, we should be aware of three key risks for this sector: the overall awareness of self-storage; the scarcity of suitably located and priced properties; and the short lease terms and land tenure in Asia,” said Frank Chen, executive director, head of CBRE Research, CBRE China.
“We believe that focus in the future will also be a consolidation of players to create scale in multiple markets.”
The Chinese mainland, meanwhile, is set to become one of the next destinations for self-storage, with densely populated metropolitan cities like Beijing, Shanghai, Guangzhou and Shenzhen, which are currently experiencing similar demand drivers such as tighter living spaces, strong job growth as well as other dislocation events, expected to become some of the key emerging markets, CBRE predicted.
“In high consumption areas such as Beijing, Shanghai, Guangzhou and Shenzhen, residents are more inclined to sell their belongings when they change jobs or get divorced, which, as a result, has led to a quite active online exchange market,” said Louisa Luo, director of industrial and logistics services, CBRE China. “This inclination will have an effect on the self-storage market growth in these cities.”
While demand will be strong, locating and securing the right type of property still seems rather challenging as industrial zones are located far outside the major population centers. Therefore, the most likely entry method would be the conversion of older office buildings, which is similar to the process in Japan, Luo said.
An earlier APAC investor intentions survey conducted in January 2015 by the real estate services provider showed that 7 percent of investors surveyed had invested in self-storage, with an additional 9 percent expressing their interest in the sector.
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