WHY RENT WHEN YOU CAN BUY?

by Andrew Work, Executive Director, Self Storage Association Asia

This is the question that Don Leung, CEO of 100Storage, is putting to the people of Hong Kong. The Chinese city has some of the world’s most expensive real estate in any category. With parking spots costing up to $160,000 (AUD), even a small flat can be out of reach. But now, 100Storage is bringing a new option to would-be real estate moguls: self storage.

“Many Hong Kongers aspire to start building wealth through real estate ownership, but recent price rises have put even the smallest flats out of their reach. Now they have another option in a fast growing asset class that answers the real needs of the people in Hong Kong,” says Mr Leung.

He has created Hong Kong’s first self storage for sale. Consumers can buy a storage unit and then use it for themselves, become mini-self storage operators and rent it out, or opt to have 100Storage rent it out for them, sometimes valet style, and secure an income stream. With land title to the property, they can get a mortgage to buy or purchase outright. The first location, “Now that we have proven that the concept works, we expect that more property owners will see the value of this new concept and choose to support the growth of self storage in this manner.

The Storage One, was launched in April and two more projects are in development. The Storage One has 125 units on the 8th floor of an industrial building. Self storage in Hong Kong is found in industrial buildings, giving them a new life after the wholesale relocation of manufacturing to China in the late 20th century. Mr Leung had to bring a range of interested parties across the line to implement the new concept. The Lands Registry had to be convinced of the merit of subdividing property title into very small units within the overall space owned by a larger landlord who still owns the lobby, corridors and other parts of the space.

The landlords had to be convinced that the business model would work. Of course, the first project is always the hardest. The second location, The Storage Village in another part of Hong Kong is already selling units to strong demand while construction is underway. The third location has been selected and is in development. As the concept becomes proven, Mr Leung expects more landlords with unrealised potential in their real estate will look to this model.

“Now that we have proven that the concept works, we expect that more property owners will see the value of

this new concept and choose to support the growth of self storage in this manner,” says Mr Leung.

Ownership changes the way people think about their storage space. Mr Leung’s company has been able to justify higher costs associated with supplying electrical power and a broadband connection to each unit. Customers can install their own cameras and environmental sensors on top of the fire alarm that comes with each unit. Storage units are built using expensive fire retardant paneling and top rated construction materials all around. This means that the units far exceed minimum fire safety standards.

Mr Leung is a Hong Kong native, but spent formative years in Australia. He graduated from the University of Queensland in Brisbane, home of many of Australia’s great self storage entrepreneurs.

“Hong Kongers don’t have the luxury of space that I got used to in Australia. But they do have a similar enthusiasm for real estate investment. This is shared by people across Asia and I aim to bring this model to other countries across the region”, says Mr Leung. With a strong start in Hong Kong, that seems entirely possible and this company will be one to watch in the next few years. l

Left: 100Storage founder Don Leung shows off the storage units for sale, including the fire detection and features including power and broadband connection. Valet boxes are visible on the right. Above: The Storage One has applied to the SSAA programme, S.A.F.E. Self Storage Standards and anticipates passing the inspection to receive a Gold Status, indicating compliance with all government fire safety regulatory requirements. Top right: Onwards and upwards! The launch of The Storage One with founder Don Leung (4th from left), SSAA (Asia) Executive Director Andrew Work (2nd from left) and Kevin Shee, founder of SC Storage (2nd from right).

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