Hong Kong Self-storage Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Hong Kong Self-storage Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Hong Kong Self-storage market is expected to register CAGR of over 10% during the forecast period 2022 - 2027. The growth can be attributed to the increasing difficulty in finding spaces for commerce. Moreover, in Hong Kong, people live in small, expensive flats and generally lack space to store their items like old books and clothes. The market sizing estimates reflect the number of self-storage facilities in the region and the space available for renting or leasing units to personal and business end users for storage.

Key Highlights

• The living space per person in Hong Kong is much less compared to developed economies like the United States. To provide more context, according to the Census and Statistics Department of Hong Kong, in 2021, the average living space of public rental housing tenants in Hong Kong was 13.5 sq. m per person, and it has historically remained between 13 to 13.5 sq. m from 2017 to 2021.
• In addition to the acceleration provided by the COVID-19 pandemic, the context of smaller living spaces in the residential area of Hong Kong predates itself as a driving force of the market studied. Residents have opted for self-storage units in the region to store unworn seasonal clothes, unnecessary furniture, important heirlooms, etc., to save space in their small compact living spaces. Increased urbanization and the rise of micro-apartments in Hong Kong have supported the demand for self-storage units.
• Furthermore, downsizing businesses, especially small and medium-sized enterprises, to combat the dip in demand during the COVID-19 pandemic led to the more extensive use of self-storage facilities. The demand is driven by the likes of the restaurant sector, which was compelled to store unused appliances in the facilities, thereby creating a positive impact on the market studied. According to the Hong Kong Federation of Restaurants & Related Trades, around 1,200 restaurants had to suspend operations in February 2022 as new lockdown measures were imposed.
• There is going to be a significant impact on the growingself-storagee industryinf the region. The investors might find it challenging to get additional capital from financial institutions to expand their facilities in the near future. However, the market is expected to experience a strong demand on account of employees who would need extra space as they work from home and students who would need space to store their essentials after being asked to vacate their campuses.
• COVID-19 has impacted several economies and industries; however, some industries continue to expand steadily. The self-storage industry has not been severely affected by the pandemic and has grown gradually with the consumer demand for storage. Because of the city's limited space, Hong Kong has several local storage providers.

Key Market TrendsPersonal Segment is Expected to drive the market growth

• Mostly, the people in Hong Kong use self-storage during house-shifting. At the same time, in-home remodeling or even painting the house, short- to medium-term storage necessities may develop; storing items in short-term self-storage is a suitable option for moving objects. Also, self-storage can relieve stress by protecting personal belongings from damage while repairs are underway.
• Further, the increasing migration from the region has significantly contributed to the self-storage market’s growth rate. In 2021, data from the city’s Census and Statistics Department indicated that net migration out of Hong Kong reached roughly 90,000 after Beijing imposed the national security law.
• When people travel for work or pleasure, leaving their belongings unattended can be highly perilous, particularly if they contain assets like valuable jewelry and vehicles. Instead of immediately selling belongings to the highest bidder and incurring a loss overall, customers consider a practical alternative like self-storage when moving abroad on secondment for employment. Larger objects like furniture, television, artwork, book collections, bicycles, and cars can be stored in moderately cost storage containers so that they are in better condition when consumers return from their trip.
• Self-storage businesses have expanded all over Asia, remodeling aging facilities and preparing brand-new construction. Numerous businesses doubled the floor space of their current locations in Hong Kong. For instance, companies such as Storefriendly, Storage One, and others opened new facilities in 2021 to meet consumer demand. With growing urbanization and lifestyle changes, the self-storage market is expected to grow significantly during the forecast period.

Increasing Population Density and Rising Consumerism is one of the Drivers of the Market

• Hong Kong has experienced high residential prices and smaller unit sizes. This, combined with high-income levels for a certain section of the population and a consumption-driven society, is generating considerable demand for self-storage. According to a report by the New York Times, a home in Hong Kong costs more than 20 times the median salary of the people.
• The market studied is also characterized by consumers’ aversion to paying a significant amount as a security deposit to rent a storage unit. Although most players in the market are operational to procure the deposit, the user preference of not being willing to pay upfront can profoundly influence the current payment structure of the market in the long term.
• Additionally, according to a survey conducted by Greenpeace, Hong Kong ranked at the top or second in 10 out of 12 indicators that confirmed a tendency to excessively spend on material goods due to an unhealthy reliance on shopping.
• As consumers expect next-day deliveries, companies have come to value logistics even more and have resorted to self-storage. Multiple market vendors have acted positively on a similar note. Along with the rising growth of the e-commerce sector in Hong Kong, niche service demands, like climate-controlled environments and specialized spaces, are expected to provide growth opportunities to the self-storage market in the near term.
• The expansion of e-commerce and the opening of smaller e-shops is also expected to act as a significant growth driver for the market. Larger e-commerce firms are increasingly using third-party logistic services due to lack of space. Further, according to the Hong Kong Trade Development Council, e-commerce is expected to account for 6.1% of total retail sales by 2021.

Competitive Landscape

The competitive landscape of the Hong Kong Self-Storage Market is extremely fragmented, with more than 90 operators handling about 415 odd facilities in the region. The growing need for self-storage facilities is expected to aid new players in entering the market. Some of the recent developments in the market are as follows:-

• February 2022 - Apple Storage Group, which manages more than 100 self-storage facilities in Hong Kong, introduced a new line of products called "Apple Storage Premium," which attempts to integrate self-storage with office space, warehouse management, and clubhouse-style consulting. Individuals and business owners who require a location to store and ship their items will be the target market for the company's new service.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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