The self-storage market in Singapore is poised for growth in 2013, according to a collaborative study by real-estate services firm Colliers International and Lock+Store Self Storage, an operator with two facilities in the Southeast Asia nation. Although 96 percent of the 894 survey respondents do not currently use self-storage services, nearly a quarter of them indicated they planned to use self-storage in the next year.
Part of the reason for that could be the island’s trend toward residential downsizing. Many Singaporeans are moving into smaller, urban apartment spaces, which could create a greater need for residents to store personal property outside their homes. Small residential spaces characterized as “shoebox units” are gaining in popularity, with the number of units growing from 2,400 in 2011 to an estimated 11,000 by the end of 2015, according to the Urban Redevelopment Authority.
“Amid the development trend towards smaller apartment sizes in line with shrinking household sizes, this pool of potential users could expand and translate into new demand for self-storage space over the next few years, particularly when more households move into their newly completed private shoebox residential units,” said Chia Siew Chuin, director, research and advisory, for Colliers International.
The number of available small apartments in Singapore has grown alongside rising land costs, according to the report. The number of self-storage facility operators has also grown, with nine self-storage companies now operating 25 facilities.
Rental price could be a barrier to entry for potential customers, with 87 percent unwilling to pay more than $164 per month for 50 square feet of storage. Consumer price concerns and an influx of new operators likely means facilities will keep rents competitive, according to the report. Rising warehouse costs could also push customers toward self-storage.
In anticipation of new demand for self-storage, Lock+Store is expanding its Chai Chee facility by 50,000 square feet. “At present, the opportunities still outweigh the challenges, and our company is growing at a rate of 5 percent,” said CEO Helen Ng. “We will continue to pursue a growth strategy of acquiring facilities in areas that are underserved, such as Jurong and Yishun. Lock+Store will also continue to introduce innovative self-storage concepts that cater to the evolving and specific needs of niche customer groups.”
Among the new operators is Hong Kong-based StoreFriendly Self Storage Group Pte. Ltd. which opened its first Singapore facility in December 2011 and has quickly added four locations. Expansion of other self-storage players in the market could be slowed somewhat due to rising land and operating costs, the report said.
StoreFriendly operates more than 90 locations comprising 1 million square feet throughout China, Hong Kong, Macau and Singapore.
Colliers International is a global commercial real estate services company operating 522 offices in 62 countries. A subsidiary of FirstService Corp., it offers real estate users, owners and investors global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research.