Here's how management compares HK's self storage market with Singapore's.
The Store House Hong Kong, which has three facilities on Hong Kong island, and one in the New Territories, is now a wholly-owned subsidiary of General Storage Company Pte. Ltd (GSC). GSC acquired The Store House for approximately S$12.12 million.
GSC operates a self-storage business in Singapore, under the Lock+Store brand, with facilities located in Tanjong Pagar and Chai Chee. Singapore Post (SingPost) acquired 100% stake in GSC in January last year.
In an interview with Singapore Business Review, GSC CEO Helen Ng said that the acquisition is strategic as they attempt to capture self-storage opportunities in the region amidst rising affluence and consummerism.
Ng says they are now looking at expanding the footprint of The Store House as and when the opportunities arise.
At the moment, they will be looking into synergising The Store House's operations with their Singpost operations especially in terms of end to end logistics, she adds.
Lock+Store will also enter the Malaysian market with the opening of its new facility in Glenmarie, Malaysia by October 2014.
Here's what Ng has to say about the similarities of Singapore and Hong Kong markets:
"Hong Kong, like Singapore, is a densely populated country with a sizeable population of middle-income families, expats and SMEs. As a result, the self-storage penetration rates in both countries are relatively similar - about 0.3 sqft of self-storage space per capita/person in Singapore and 0.35 sqft per capita/person in Hong Kong. The self-storage facilities in Hong Kong, which typically range from 8000-10000 sq ft, are generally smaller than those in Singapore. They are also located closer to the MTR as their customers tend to use the MTR, whereas in Singapore, our consumer sentiments survey has shown that the typical self-storage user in Singapore travels by car/owns a car. The other difference is that the majority of facilities in Hong Kong operate under a franchise model whereas the majority of facilities in Singapore are owned by their operators.
In both Singapore and Hong Kong, the self-storage industry has great growth potential with rising consumerism and affluence. However, there are risks on the horizon. In Hong Kong, there is limited supply of industrial buildings in established populated catchment areas as Hong Kong allows industrial buildings to be converted into commercial buildings such as hotels. More buildings are being converted as their value can sometimes quadruple overnight. This, coupled with the fact that no new industrial buildings are being built, has resulted in a diminishing supply of buildings for industrial use.
In both Singapore and Hong Kong, escalating property prices are limiting expansion plans and impacting on profit margins. Our consumer sentiments survey in Singapore has shown that price is an important concern when choosing a self-storage facility, although location and ease of access are more important considerations. In Hong Kong for example, proximity to the MTR is an important consideration when choosing a self-storage facility.
In both Singapore and Hong Kong, we have not reached the point of market saturation yet, although the increased competition has driven operators in both countries to introduce more innovative and holistic offerings, such as pairing self-storage with packing and delivery services."
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