The self storage industry has a brief history in Asia compared with that in the more mature markets in Australia, Europe and North America, but evolution is following to this part of the world as the notion of storing personal belongings elsewhere catches on.
Self storage also provides a flexible alternative for businesses that do not want to sign long- term leases and prefer to rent an appropriately sized space from a service provider, instead of a large warehouse where much of the space may go unused.
Outside of Australia, the industry is most established in densely populated regional cities such as Hong Kong, Singapore and Tokyo.
However, the concept is also catching on in China and Taiwan, and in very early development stage in India and parts of Southeast Asia.
Self storage markets in Asia Pacific are quite diverse and facilities on offer may vary substantially from one market to the next.
In the broadest classification, facilities are either indoor or outdoor. However indoor facilities can be housed in a warehouse or other industrial buildings (Hong Kong, Singapore and India), lower grade office buildings (Tokyo) or general purpose commercial and even residential buildings (China and Taiwan) while outdoor facilities can include shipping containers.
Leasing and owner-occupation represent two different options for operators. Leasing is more common in the region as more operators prefer leasehold interests that present lower entry costs.
In general, JLL found that operators lease space for 2-3 years in Hong Kong, Singapore, Tokyo and Taipei, and up to 5 years in India and 10 years in China.
Visibility into asset pricing of assets is relatively low as there are few self storage facilities sales transactions outside of Australia.
Based on our estimates and limited transactional evidences, we estimate yields to range from 2-4% in Hong Kong and Taiwan, 5-7% in Tokyo and Singapore, and up to 8% or above in China and India, In comparison, Yields of self storage platforms in Australia typically range between 5 and 8%.
Although self storage can still be difficult to define as a single product, this dynamic sector is now emerging on investors’ radar because of potential market growth and increasing public awareness.
JLL hold that view that owners of platforms in Asia will likely have a highly investable product, particularly if the assets are self-owned.
For details on rental and pricing which operators needs to consider when planning to open new facilities, please read the upcoming JLL report on the self-storage industry in Asia Pacific in May.
Table 1 : Yield
Source: JLL, 4Q 2016
Notes: Net yields (% pa) either based on transactions observed recently or estimates by JLL,
and depending on location, access and building facilities.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
The time is ripe to embrace Industry 4.0
Traditional brick-and-mortar retail has suffered tremendously, as countries have been implementing effective stay-at-home and social distancing policies to mitigate virus spread, while those worst hit have enacted strict draconian lockdowns
We have entered a time where, seemingly, interconnectedness is the new enemy, staying in is the new going out, and antisocial is the new social. COVID-19 has brought us on the cusp of growing accustomed to new norms and sounded a wake-up call in terms of how we live.
Covid-19 puts flexible space markets under strain
In the wake of operator defaults, landlords will be forced to re-evaluate the role of flexible space in their portfolios.
The global Covid-19 outbreak has had serious negative effects on commercial real estate, including flexible space. Of late, many operators have experienced the flexible nature of the business working against them, as many occupiers have opted to surrender desks and implement work-from-home plans.
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