The self storage industry is still in the early stages of development in Asia and there is a long way to go before reaching the market penetration levels of the more developed regions of America or Australia. That said, the industry clearly has established itself in Japan , Hong Kong and Singapore ; all areas with high population density, concentration of wealth and consequently space at a premium. Add to that an ever increasing acceptance of western (materialistic) values and developers have found receptive customers to outsourced storage solutions.

 

So while the industry may have established itself, recognition, even in the most advanced markets, is still very low. Focus therefore remains on developing the concept in each market, building brands and gaining industry acceptance and recognition.

 

In this process we have seen the markets develop differently. Acknowledgement and consideration of local customs and peculiarities are pre-requisites before starting operations in Asian markets. Not only are unit mix and sizes different in each market, but also location and average facility size vary greatly.

 

 

Market	Population (Million)	Area (Square miles)	Population/square mile	Total net lettable area (sf)	Number of storage facilities	Average facility size (sf)	NLA/pop head
Singapore	4.8	268	17,910	500,000	9	55,555	0.10
Hong Kong	7.0	462	15,151	700,000	100	7,000	0.10

(end 2007 approximate numbers, author's estimation)

 

Market penetration in both markets is the about same but the approach in getting the product to the customer clearly is very different. There are good reasons for this such as available infrastructure, layout, and real estate cost. Further, while storage facilities in both markets are primarily conversions, the types of buildings available for conversion vary greatly as well as building size and regulatory environment through which to gain the required approvals.

 

The real difference, however, is in the approach the operators have taken when establishing the market.

 

The Singapore model is a Hypermarket model with large facilities that customers are willing to travel to. Ease of access for customers and prominent location are the key facility drivers. Operators in Hong Kong have to a larger extent followed a “7Eleven” like strategy, where dots on the map and proximity to the customer are key drivers. Facilities are less identifiable due to shared use coupled with signage restrictions and marketing is therefore often done through media advertising. Clearly for an operator, exponentially increasing the number of sites will complicate operations and benefiting from economy of scale becomes difficult with many smaller sites. Various arrangements through joint ventures, site management agreements and franchise models are therefore pursued.

Japan too has seen a unique approach to self-storage. The development from the traditional containerized ‘trunk rooms’ to a sleek and modern storage solution with air-conditioning and carpeted floors has been readily accepted in Japan, but with industry recognition figures hardly more than 20% there is still a long way to go.

 

There is interest in getting self storage off the ground in other Asian markets – in particular countries such as South Korea , Taiwan , Thailand , India and China look to be promising markets. They represent a real chance for the diligent entrepreneur to gain an early foothold and help shape the industry and effectively set the benchmark.

 

So while this may be a great opportunity, it is not one to be taken lightly. If the last 5 years in Asia has taught us anything, it is that self-storage will work in Asia , but do your homework first: it is not a “fit one – fit all” scenario, but rather a model that must be adapted to the local environment and carefully executed accordingly. If done right, Asia has enormous potential and we look forward to being part of this development with adventurous, yet diligent, self storage entrepreneurs.