SELF-STORAGE INDUSTRY IN SINGAPORE: A VALUATION PERSPECTIVE

Abstract

Originated from the US, self-storage refers to storage space that is rented to tenants like households and small businesses, usually on a monthly basis. The industry is rapidly growing in Singapore, mainly driven by shrinking living space and rising cost of business space. Yet, the current supply of self-storage facilities in Singapore is far below other Asian counterparts like Hong Kong and Japan, implying huge potential for growth. Categorised as a special-purpose industry property, valuation of self-storage facilities in Singapore poses challenges to valuers due to their relatively specialised physical features and the lack of market transactions data. Surveys conducted with valuers and operators, together with a close review of valuation approaches show that income approach was identified as the primary valuation method for self-storage facilities. Meanwhile, cost method can be used as a counter measure, despite its inherent weakness of ignoring business value, which undermines its usefulness. A case study of an existing self-storage facility in comparison to a hypothetical warehouse reveals the significant value creation in the development of the facility. Meanwhile, the rapid expansion of the industry in Singapore also calls for land use relaxation to facilitate the development of self-storage facilities in commercial zones and other unconventional sites. Finally, interviews with several self-storage operators also suggest that self-storage has been increasingly sought after by investors as it is a unique real estate asset class.