Demand for self-storage facilities will likely grow as more people are looking to store personal items outside the home.
Self-storage is an industry where storage space is rented to tenants, mainly small businesses and individuals. Though such space demand in Thailand is still relatively small at this point, it is growing in line with urbanisation, public awareness and growing small businesses, according to property consultancy JLL.
"The self-storage industry in Thailand is relatively fragmented, with only a handful of small, self-owned providers operating primarily Bangkok's suburbs and key resort destinations such as Pattaya and Phuket," says Sarun Kunakool, senior manager of research and consultancy at JLL.
"As self-storage is a new notion and remains relatively unknown to many Thais, it serves the niche clientele, with most of the customers being expats," he added.
The majority of self-storage facilities in Thailand offer 24-hour keycard access, CCTV surveillance and on-site guards.
Due to low competition, rental rates for self-storage facilities in Thailand are relatively high -- 1,500 to 2,500 baht per month for storage units in Bangkok of 1.5 square metres to 4 sq m each.
"Such high rental rates, coupled with a lack of public awareness, represent a major obstacle to their popularity. However, in the long term, structural factors are expected to drive further growth in Thailand’s self-storage market," Mr Sarun says.
As Thailand becomes increasingly urbanised and residential unit sizes continue to shrink, the need for additional storage space will only grow. Many Thais are looking to store personal items such as unused furniture, sports equipment and other belongings outside the home.
With growing demand for safe, reliable and convenient self-storage facilities, operators will be able to develop units of economy-of-scale sizes, making them more affordable.
Bob Tan, director of alternatives for Asia Pacific capital markets at JLL, says: "Urbanisation is an important driver for self-storage. Growing urban populations mean smaller and increasingly expensive living spaces in cities."
In Asia, the self-storage industry is most established in densely populated and more affluent regional cities. Hong Kong, Singapore and Tokyo have the smallest average home sizes in the region -- less than 74 sq m compared to over 90 sq m in the United Kingdom, and over 185 sq m in the US and Australia.
As e-commerce and small and medium-sized businesses grow, there will likely be greater demand for niche or value-add services, presenting various opportunities for operators in these growth markets. Such services include document storage, climate-controlled environments, valet delivery, among many others.
The self-storage sector is also increasingly on the radar of both private and institutional investors due to its growth potential and increasing public awareness.
Yields on self-storage facilities are potentially attractive compared to other traditional asset classes. According to the report, landlords can expect yields of 2-4% in Hong Kong and Taiwan, 5-7% in Tokyo and Singapore, 5-8% in Australia, and 8% or more in China and India depending on location, access, quality, and building facilities.
Alternatives such as self-storage are also seen as an affordable investor option, compared to higher-priced big-ticket core assets such as offices, and offers an avenue for investors to diversify their portfolios. Alternative assets include data centres, student housing, schools, car parks, healthcare facilities and others.
Mr Tan says: "Going forward, we will see greater interest from operators and investors seeking opportunities to participate in growth markets, and to invest in good quality platforms with scale, particularly if they already own their real estate."