A Warburg Pincus-backed self-storage operator continues to expand its presence in Hong Kong with a Kowloon acquisition which marks its fourth reported purchase of new space in the city so far this year.
Storhub, which ranks as Singapore’s largest self-storage operator, late last month signed a sale and purchase agreement for a floor in the Precious Industrial Centre in Cheung Sha Wan, sources familiar with the transaction told Mingtiandi, confirming local media reports of a HK$66.27 million ($8.4 million) deal.
The purchase marks the latest move by storage providers backed by some of the world’s largest private equity investors to expand their business, and their real estate holdings, in Hong Kong, as fund managers look for higher yielding sectors to counter sliding yields from office and warehouse investments.
StorHub, which Warburg Pincus acquired from CapitaLand in early 2019 has gone on a space shopping spree in Hong Kong this year, having earlier picked up properties in San Po Kong and Hung Hom, in addition to an earlier purchase in the Precious Industrial Centre.
Bulking Up in Cheung Sha Wan
In its latest acquisition, Storhub is picking up the 12,493 square foot second floor of the industrial building at 18 Cheung Yue Street, as well as a parking space on the ground floor. At the reported consideration, the company is paying the equivalent of HK$5,304 per square foot, with Savills reported to have brokered the deal.
“Strata title sales of similarly aged industrial buildings in the area were in the region of HK$4500 to HK$5,000 per square foot. But after consideration of the better location of Precious Industrial Centre, the unit rate is still fair,” said Alex Leung, senior director at CHFT Advisory and Appraisal and Thomas Fok, real estate valuer at CHFT.
The new space will add to 68,779 square feet, plus six parking spots, Storhub acquired across seven floors in the 11-storey building in a HK$350 million deal with the family of late “Shop King” Tang Shing-bor.
Besides its purchases at the Precious Industrial Centre, the self-storage operator in March spent HK$182 million on an acquisition in San Po Kong and another HK$350 million for space in the Eldex Industrial Building in Hung Hom during the same month.
With all three of those acquisitions operational, Storhub now has six locations in the city with one more facility in Kwun Tong in the pipeline, according to its website.
Completed in 1977, Precious Industrial Centre is about three minutes walk from the Lai Chi Kok MTR station and close to Cheung Sha Wan Plaza and D2 Place shopping malls. A previous occupant of the building’s second floor purchased the property in August 1989 for HK$20.5 million, according to Sing Tao Daily.
Situated in an area where the Urban Renewal Authority plans to build 1,830 residential units, Storhub sees its Cheung Sha Wan location benefiting from potential demand from new residents in the neighbourhood, according to its website.
CHFT’s Leung and Fok observe a growing demand for self-storage in Hong Kong driven by the city’s dense population, with self-storage operators rushing to acquire aged industrial units in the city to meet demand.
“In the Cheung Sha Area, there is demand for self storage from both office occupants as well as residents, such as residents of nearby estates like Mei Foo Sun Chuen,” they added. Mei Foo Sun Chuen is a 99-block private housing complex one subway stop away from the Precious Industrial Centre.
StorHub also operates 13 self-storage facilities in mainland China in cities including Shanghai, Beijing and Shenzhen, according to its website. It has also been expanding its presence in Japan, South Korea and Malaysia since 2021.
Mini-Sheds Stay Hot
Amid ongoing Covid-19 restrictions and rate hikes, investment funds have continued their hunt for high-yielding industrial assets with that search for returns bringing top players into Hong Kong’s mini-storage sector.
In March, Brookfield bought RedBox Storage from InfraRed NF, a joint venture of local developer Nan Fung Group and British investment firm InfraRed Capital Partners. The Toronto-based investment firm has been beefing up storage space for its RedBox portfolio, spending HK$211 million for a floor in Shatin Industrial Centre in New Territories in May and HK$55 million for a pair of units in the Chai Wan Industrial Centre last month.
The Canadian firm’s rivals at Blackstone last November bought the Elegance Printing Centre in Shau Kei Wang for HK$500 million, with plans to convert the seven-storey industrial block into a self-storage hub as part of its joint venture with local operator Storefriendly.