InfraRed NF, a Hong Kong-based private equity real estate fund, has acquired a 90 per cent stake in Hong Kong’s premium self-storage provider RedBox Storage Limited for an initial commitment of $50 million.
In an announcement, InfraRed NF said its investment in RedBox forms part of its plan to create a “market leading self-storage platform” in Hong Kong through a series of direct property acquisitions.
InfraRed NF looks to expand in Hong Kong, where the self-storage market is suffering from a demand-supply imbalance. According to a CBRE research note, there was a shortfall of 200,000 square feet of stock in Hong Kong in 2015.
RedBox is InfraRed NF’s second investment in the self-storage market after it invested $28 million in China Mini Storage, an intelligent technology-led self-storage operator in China, in 2017.
RedBox, founded in 2014 by E3 Capital Partners, claims to be one of the market leaders in Hong Kong in terms of security and strategically located sites that are being designed for fire safety.
“Ownership of RedBox’s properties provides an attractive real estate investment opportunity in a market where demand for self-storage is high and supply is constrained by the government revitalisation programme and regulations following the 2016 fire in Ngau Tau Kok,” said Stuart Jackson, CEO of InfraRed NF.
In earlier interviews, Jackson said InfraRed NF is looking for locations in core urban areas that can be converted into mini storage. By the end of this year, the company expects to have a presence in all four first-tier cities in China with 100,000 square meters of total storage space.
RedBox CEO Simon Tyrrell said the investment from InfraRed NF will be used to expand the startup’s existing operations across additional sites in Hong Kong and further develop the company’s technology and logistics platform.
According to the report “The rise of self-storage in Asia Pacific” published by JLL Asia Pacific, urbanisation, public awareness, and the growth of small businesses is driving the demand for self-storage in the Asia Pacific.
“We’re also seeing rising investor interest in this real estate asset class because of market growth, increasing public awareness, as well as the lack of specialist self-storage REITs in the region,” the authors of the report said.