5 Surprising Things You Probably Don’t Know About the Asia Self-Storage Industry

While American self-storage companies that do business in multiple cities and states must deal with various local laws, multi-national operators have to contend with a range of languages, customs and other unique cultural traits. In Asia, consumer mobility among the continent’s many countries makes it worthwhile to create a single, identifiable brand; however, the companies that have undertaken this endeavor (for example, Cube Self Storage, Extra Space Asia, Lock & Store, Storefriendly and StorHub) have encountered a few quirks and challenges along the way.

Following are five facts about specific Asian self-storage markets that may surprise you, plus what they mean for facility operators in those areas.

Thailand: Vacation Renters

In self-storage, there are generally two categories of customers: residents storing for personal reasons or companies storing for business purposes. Of course, the line can be blurred if, for example, an entrepreneur stores family belongings and inventory in a single unit. But Thailand has a whole other category of renter.

The country’s attractiveness as a multi-faceted tourist destination entices people who plan to stay for extended periods of time. These folks often arrive with gear for multiple tourist activities, from beach outings to hiking the jungle to cave excursions to the high-life of Bangkok’s Michelin-starred restaurants and trendy nightclubs. Rather than haul all this stuff around with them, they often establish a sort of home base in the nation’s capital, Bangkok. This means they need storage.

Smart marketing by operators like Bangkok Self Storage, i-Store, JWD Store It!, Leo Self Storage and others targets these travelers. It’s unlike anywhere else in Asia. They’re “personal” consumers, yes, but not like the typical local or expat tenants who live in Bangkok. As post-pandemic tourism picks up, this category of renters will only grow.

Hong Kong and Singapore: Unique Restrictions

Nearly everywhere, a self-storage developer or owner needs permission from local authorities to build a facility. However, in the city-state of Singapore and the Special Administrative Region of Hong Kong (China), there are very strict restrictions, and operators can only establish their businesses in pre-existing industrial- and warehouse-zoned buildings.

Hong Kong saw its industrial base shift en masse across the border to Southern China during its economic re-opening in the 1980s. Then self-storage arrived about 20 years ago. The industry gives new life to older buildings and fits in well in areas that are being rezoned to accommodate more residential and commercial buildings.

Up until about three years ago, the exorbitant cost of real estate meant self-storage operators would only buy space floor by floor. But major institutional investors like Blackstone Real Estate Income Trust Inc., Brookfield Corp. and Warburg Pincus LLC have arrived, and their industry partners (Storefriendly, Redbox and StorHub, respectively) are buying buildings en block. This means they can control the entire customer experience on the property—like in most other countries.

Singapore’s government has overall plans for the economy, including lofty environmental goals and the promotion of high-tech, light manufacturing on its industrial properties. Self-storage helps in this mission by providing, as Storefriendly CEO Jes Johansen puts it, “an elegant end of life” for older buildings that can’t be used for other purposes. Operators also support up-and-coming, small-scale online retailers. With increased flexibility, they could do more to respond to the needs of innovative entrepreneurs; but for now, they’re helping small-business owners with their enterprise needs.

Japan: Urban Growth

Japan has an aging and declining population, and smaller villages and towns are becoming less attractive for young people. The newer generations are heading for the bright lights of the major urban centers like Osaka and Tokyo, and they know and love self-storage! The steady growth being seen in the big cities creates opportunity for storage companies that can meet the demand.

Japan has a high-trust culture, and its consumers are extremely familiar with self-storage. This means that even small, unattended facilities are very popular and require only minimum security. So, the major players are expanding to big cities.

Japan and Taiwan: Ultra-Low Interest Rates

Interest rates in Japan and Taiwan are still very low. Japan has had negative interest rates for many years. Every time analysts think the Bank of Japan will finally raise interest rates above the 0% mark, they’re confounded yet again. A recent Reuters survey of economists noted that fewer than half expect negative rates to end in 2024.

Taiwan rates aren’t much higher. The Governor of Taiwan’s central bank was described as a hawk on inflation when he threatened to hike interest rates past their eight-year high of 1.875%.

Singapore: Airflow Mastery

In an equatorial environment where the temperature is 85 degrees on most days and a chilly day is 75—yes, it’s also very humid—you would think that self-storage operators would need to provide environment-controlled conditions for customers. However, in Singapore, only about 50% of facilities offer this. By comparison, Hong Kong has hot, humid summers but cooler, drier winters, and storage properties are almost 100% climate-controlled.

It isn’t a question of wealth, as Singapore is one of the richest countries on earth. Rather, its residents are masters of natural airflow and ventilation in all types of buildings. Facility operators and customers are comfortable with keeping goods in a more natural environment. They don’t see the need to seal them away and keep them constantly air-conditioned. Of course, there are exceptions for items like wine and fine art; but Singaporeans have a lot to teach the world about sustainable, low-energy building design.

Asia is a huge continent, and the self-storage industry is expanding there. In many ways, it’s growing as varied as the people, countries and cultures it serves!

Andrew Work is executive director of the Self Storage Association Asia, which is dedicated to helping self-storage operators, investors and suppliers who work in and are interested in the region. Among the group’s offerings is the annual Self Storage Expo Asia. For more information, email [email protected].