SteelStorage

The term “property investment” tends to evoke an image of a small commercial unit or rented apartment. However, there are plenty of other ways that investors can get involved in real estate without going near a house or commercial apartment.

 

 

Storing junk for overloaded, moving or downsizing householders can be a very lucrative business.

 

Demand for self storage units has been increasing and is expected to continue to rise as more Australians move into apartments and smaller homes, research group IBISWorld says.

 

“Revenue from self storage facilities is generally counter cyclical in nature. IBISWorld forecasts that demand from this market will increase through 2008-9 and 2009-10,” the group says.

 

Self Storage Association of Australasia Executive Officer Rennie Schafer says rents have increased by 6 per cent to 8 per cent annually over the past three years. But demand for, and returns on, storage units has weakened in the past 6 months.

 

If the economy were to come out of its downturn reasonably quickly, the market should emerge relatively quickly, the market should emerge relatively unscathed, Schafer says.

 

The self storage market is highly localised and risks will differ with the location of the property. The type of ownership also changes the risks.

 

Strata properties have shown little or negative capital growth in many cases, Schafer says, due to lack of buyers and the difficulty of being locked in to using the property for that purpose.

 

Freehold units give owners more options, including the chance to redevelop the property should the opportunity arise.

 

Investors should also be aware that it could be years before they break even because it takes time to fill up, Schafer says, “But when the tenants are there, it’s a stable business.”