More than 300 self-storage facilities that operate out of industrial buildings in Hong Kong could be in violation of land-use restrictions. The Lands Department, a government agency, has reportedly warned several self-storage operators about possible violations and placed an encumbrance against two facilities, according to a report by “Ming Pao Daily.”

Lands Department officials issued warning letters last October to Store Friendly Self Storage and My Storage, which conduct business at the Sing Mei Industrial Building on Kwai Wing Road in Kwai Chung, a town in the New Territories area of Hong Kong, according to the source. When neither business took action before a November deadline, the agency placed an encumbrance on both facilities, the source reported.

In all, officials have issued warnings to the owners of four self-storage facilities in Kwai Chung in the last three years, according to the report. However, the department also said a warning letter by itself does not necessarily mean a self-storage business is in violation of its land deed, the source reported.

For self-storage not to qualify as a legal business in the industrial category is a perplexing stance for the Lands Department to take considering Store Friendly facilities were classified by the town planning board as a non-polluting industry, a company official told the source.

There are more than 500 self-storage businesses in Hong Kong serving more than 100,000 customers, according to Luigi La Tona, executive director of Self Storage Association Asia. Industry professionals believe any government decision to subsequently determine storage facilities as illegal would affect customers and employees, and possibly jeopardize the validity of property-insurance coverages, the source reported.

Among the industry representatives who have said they would likely seek a judicial review to challenge any government moves to stop storage facilities from conducting business is Kevin She, CEO of SC Storage, which operates 60 facilities in Hong Kong. “Just because we are mini in size does not mean we are not a warehouse,” She told the source. SC Storage has not received any warning letters, he said.

“The self-storage industry is one of the brightest spots in the real estate and consumer service sector. Compared to other modern markets, Hong Kong is woefully underserved, but venture capital and investment-bank money is getting behind new entrants and global players [are] currently expanding in Hong Kong,” wrote Andrew Work in a recent editorial published by the “Harbour Times.” “The town planning board seems fine with self-storage. The Lands Department seems to have issues. It seems there is a case of disconnect here creating confusion.”

Work argues that self-storage facilities found in violation of land-use restrictions but otherwise operating legally should be given amnesty by the government. “An amnesty would be just the thing here for many otherwise lawful and productive uses of industrial buildings,” he wrote. “The government has been taking commendable small steps to rezone industrial buildings. The pace could be faster, however. Until then, an amnesty ‘legalizing’ people using industrial buildings for non-industrial purposes, would serve multiple purposes.”

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