View of apartment blocks in Hong Kong.
The business of self-storage will continue to flourish in Hong Kong as its 7.4 million residents mostly live in very small apartments, reported Bloomberg.
According to a report from CBRE, the average household space in the city is merely 167 sq ft per person. In comparison, that in Singapore, the UK, Australia and the US amount to 247 sq ft, 402 sq ft, 853 sq ft and 980 sq ft respectively.
Colliers International also estimated that 76 percent of the total number of private homes (852,000 units) in Hong Kong don’t have a dedicated storage space. This means there’s often a need to keep non-essential belongings elsewhere, leading to a strong demand for self-storage.
“It’s not a glamorous business necessarily, but a good business,” said Chris Heady, Blackstone’s Chairman of Asia Pacific and Head of Asia real estate last month.
However, there’s not enough self-storage facilities in the city to serve most of its residents.
CBRE noted that the supply of self-storage space in Hong Kong in 2015 stood at 0.44 sq ft per person versus 7.8 sq ft in the US. By the end of that year, there was a shortage of around 200,000 sq ft.
The city is “the least developed” core Asian market in terms of self-storage, said E3 Capital Partners Managing Director Simon Tyrrell. “With the rise of the middle class, logic tells you that demographically the industry has to be set for a massive increase.”
At Tsing Yi in Hong Kong’s New Territories, a 20 sq ft storage unit starts from HK$400 (S$70.77) for a one-month contract, while a 100 sq ft unit is priced from HK$2,750 (S$486.54).
According to JLL, the growing demand for storage space in Hong Kong is being driven by spiralling home prices, which is forcing people to buy smaller flats. Other factors are marriage, divorce and a rising death rate.
When couples combine two households into one, there might not be enough space for all their stuff. Similarly, there’s a need for storage space if one of them moves out due to a divorce, while deceased persons may leave behind furniture and heirlooms to their inheritors.
“As people pass on, their belongings must be sorted and catalogued by their relatives. Self-storage is the solution when this event occurs,” added CBRE.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org