Demand for such property is likely to increase by 10 to 15 per cent in the near future amid shrinking living space, higher residential costs and growth in online retailing and general population in recent years, said Kevin Chan, chairman of Hong Kong-based Storefriendly.

“Demand from business users is growing with e-commerce standing out ... particularly as a growing number of consumers shift their focus online in response to Covid-19,” said Chan, whose group operates more than 130 branches and 40,000 self-storage units across Asia. Smaller living spaces also encourage households to substitute storage space in their homes, he added.

Industrial properties also offered the best returns to investors in the sector in Hong Kong, according to government statistics. They yielded 2.8 per cent compared with 2.5 per cent for grade A offices, 2.4 per cent for retail properties and 2.3 per cent for small flats, according to March data.

Chan said the group will convert the entire New Media Tower for self-storage purposes. Its partner Blackstone declined to comment about the property or transaction.

Apple Storage, a local operator, echoes the view that shrinking living spaces will benefit the sector. The firm expects to see 10 per cent growth annually over the next three years in its branches and the broader market, despite some pressures on operating costs and revenue in the short term.

Andrew Work, executive director at the Self Storage Association Asia, said all major operators in its membership base are expanding into new locations. Demand for storage space is typically fuelled by death, divorce, downsizing and dislocation. In Hong Kong, it is mostly downsizing by small and medium-sized businesses, such as restaurant operators.

Demand has tracked rising affluence, said Gigi Wong, country manager at The Store House. Collectors of artworks, for example, prefer to use self-contained storage units to warehouses, she added.

The social unrest of 2019 and the onset of Covid-19 over the last 15 months led to demand catalysts with relocations, said Tim Alpe, chief executive at Redbox Storage. Retail operators are also going from bricks-and-mortar to online, needing more space in their physical premises for inventories.

Despite the intensifying local competition, the self-storage market in Hong Kong is still in its infancy, Alpe said. He estimates the per-capita amount of storage space in Hong Kong at “just over half a square foot” versus more than 2 square feet in more mature markets in developed cities, indicating the vast potential ahead.

02:20

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“Flexible workspaces also tend to have limited storage space for users,” said Alpe. “We see this as a growing trend that will continue as people embrace smaller spaces or adjust their businesses and lifestyles.”

Industrial revitalisation policies over the past few years, he added, have reduced the stock of appropriate industrial buildings for use as storage. New fire-safety requirements for all mini-storage facilities have also led to less supply, according to Wong of The Store House.

“Investors know that self-storage is recession-proof” with steady income and requiring relatively low business inputs, Work of the Self Storage Association said. “Self-storage has stood up better than every class of real estate. It’s a real estate play and investors love real estate in Hong Kong.”