Asia’s Self-Storage Becomes The New High-Yield Investment

Mitsuuroko Group’s, Wee Meng Goh, joins panelist to discuss the investment future of Asia’s Self Storage

From November 18th through 19th 2021, Rental Storage Association of Japan (RSA) hosted a two-day “Heat up the Innovation” self-storage online forum with a diverse group of speakers from key self-storage operators and investors. Mitsuuroko Group Holding was represented by its board director, CTO, and CIO Wee Meng Goh.

Established in 2015, the forum is one of the largest conferences in Japan that focuses on self-storage, (commonly referred to in Japan as “trunk room”). With the number of facilities growing to about 14,000, the industry is gaining recognition from both consumers and investors alike.

While the forum touched on Japan’s trunk room history and the current state of self-storage investments post Covid-19, Goh shared his take on this industry in Asia as he directs the Group’s expansion into the self-storage business in Asia. “[The] demand for self-storage for individual customers is increasing due to housing miniaturization and lifestyle changes,” he says. From an investor’s perspective, the self-storage industry is income resilient with high tenant retention and offers a solid sustainable cash flow.

Investor interest in self-storage in the US and Europe is largely attributed to 3 key characteristics present in these markets: (1) availability of land, (2) ability to hold land on a freehold basis, and (3) consumer acceptance of self-storage. In Asia, the dynamics are incredibly different, creating clashes between these three factors. The same investment lenses used for the US and European markets cannot be applied. “In some Asian countries where land is in abundance, they cannot be held on a freehold basis, and in [other] Asian countries, land can be held on a freehold basis and utility rates may be high, but land availability is limited,” says Goh. For these reasons, future investors must first acknowledge that in Asia these three factors most likely will not align. “Once they accept that fact and start focusing their attention on other investment attributes such as strong sustainable cash flow, resilient asset class, and good downward protection, then the self-storage investment in Asia will expand,” he opines.

“[We] are confident that the Asian market is on track to become the next growth region for the self-storage industry,” Goh added. Mitsuuroko Group entered into a sale and purchase agreement with SingPost Investments Pte. Ltd, a subsidiary of Singapore Post Limited, to acquire General Storage Company Pte. Ltd, which operates in Singapore, Malaysia, and Hongkong. In addition, Mitsuuroko aims to develop close ties with self-storage operators and financial institutions as well as organizational supporters like RSA and make a key impact on the self-storage industry in Japan and Asia.