The 2022 SSAA report was recently published. We go over the key points brought up in relation to demand drivers.
The past year has definitely been interesting for self storage operators, with the pandemic still affecting many facets of operation. However, it was also a year for growth and improvement. The Self Storage Association Asia (SSAA) published its Annual Survey for 2021. The survey is compiled of responses from operators and investors, and provides key insight into the self storage industry in the Asia Pacific region. While the report covers a wide range of topics, we want to focus on and summarise their analysis of the self-storage industry in general, as well as their insight on demand drivers.
The first striking statistic from the report is that in 2021, the individual took up more of the share in demand than in 2020. This is due to GDP contraction across the area as a result of the pandemic, which leads to lower demand from businesses. The report concludes that this rise in individual demand is more likely a result of higher consumer awareness, as well as continually changing circumstances due to the ongoing pandemic. Most drastically, China’s percentage of individual demand shot up from 56% in the last year to 80% this year. Furthermore, operators reported that the top three demand drivers were all individual related.
The SSAA report shows that the self storage customer on average doesn’t tend to use a single type of storage, but rather a product mix that varies among markets. In Singapore and Malaysia, this year has shown the highest increase in climate-controlled storage units. This trend can be expected to continue in developing markets such as India. Specialised storage units, such as for antiques or wines, are still fairly limited in the AP region, but are expected to increase.
Storage mix among AP markets is relatively similar to last year’s survey. The SSAA report for 2021 highlights the use of valet storage in specific service cultures such as in India or Vietnam. Furthermore, they propose that developing markets will soon offer valet storage more often to differentiate themselves in a niche market. The report also showed that value added services have definite room to grow, with operators reporting these services taking up 7% of their bottom line.
Urbanisation was of particular focus on the report, especially when explaining individual demand. The rate and extent of urbanisation in the Asia Pacific region remains one of the highest in the world, being home to 53% of the global urban population, and as a result is providing several reasons for the rise of individual demand in self-storage. These urban populations will have to deal with issues of shrinking living space, growing rental prices, as well as adjusting to their changing circumstances much quicker.
Further, people in urban populations will tend to move more frequently, and will require a temporary storage solution. The lack of affordable housing as a result of a global supply shortage and low interest rates also highlight the effect of urbanisation, and along with the aforementioned factors show why individual demand has been on the rise.
The SSAA also reports that the explosion of e-commerce in the Asia Pacific market has been a major demand driver for self storage. While e-commerce has already increased exponentially the past few years, it’s only expected to get bigger, with a growth of 11% CAGR expected over the next 5 years. This figure is almost double the growth seen in the rest of the world, standing at 6% CAGR.
Online continues to be a key factor in referrals. Similar to last year, referrals resulted in the highest conversion rates in 75%, but the website and online ads came in second at 50% and 46% respectively. It’s vital to have a versatile platform that can be adaptable to different devices and provide a number of different services, such as online payments, rentals, virtual tours etc.
Perhaps the biggest takeaway from the SSAA report is how resilient the self storage industry has performed despite challenges stemming from the pandemic. Occupancy rate and rental rate are both holding steady, at 77% and 3.8 psf pm respectively, with the ‘major six’ regions showing a slight increase in these metrics. Developing markets are also trending upwards, with Vietnam and India expected to stabilise occupancies going forward. Most optimistically, 79% of operators expect to achieve a positive annual rental growth in the year of 2021. This is higher than the 72% of respondents who expected rental growth pre-COVID, proving that the rental growth trajectory is already back on track.
The 2022 SSAA report is full of analysis on insight on how the self-storage industry is dealing with its various challenges. Hopefully, this has been a useful summary of the significant points in the report, specifically the key demand drivers for self-storage in the Asia Pacific region.
Related article: Who are self storage customers in Asia?