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Being Lucrative: How the storage space could be a penny multiplier for the economy
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The storage space is the new lucrative mission that everyone wants to lay their hands on. With many nations having sectors that influence this space, the boom of the sector is very underrated. Expanding the trend from Self storage to cold and data storage, storage is valuable to every industry that utilizes it for its core activities. The storage facility in India is precedented to grow and expand ever larger in the future.

The ever-increasing growth in demand is a fact of the self-storage sector. According to the 2019 Self Storage Almanac from Mini-Storage Messenger, supply has kept up with demand up to now, with over 90 percent occupancy rates being typical since 2015. The need for storage units is projected to increase as baby boomers start to downsize. While some think that millennials will use storage less than previous generations, data from the 2018 U.S. by Marcus & Millichap The Self Storage Investment Forecast suggests that the demand trend will continue as they are still forming families accumulating material possessions, although slightly later in life.

The connected future is living, which forecasts the best ways in which emerging technology will transform lives by 2030. 5G, Artificial Intelligence (AI), Extended Reality (XR), and the Internet of Things are included (IoT). In this competitive world, digital transformation has become a key enabler for companies to thrive (1). Instead of CAPEX investments, organizations are exploring ways to adopt newer technologies based on business results. Another reason for the growth of storage is that we are witnessing a shift from Cloud Computing to Edge Computing, reducing operational costs, and improving performance. Many players offer Azure stack edge, including Microsoft.

Big cities and food processing industries that are usually thousands of miles apart are the major consuming areas. However, it is not a simple job to move agricultural produce across the country’s length and breadth or export with limited Cold Chain Logistics. Natural products are generally perishable and must be maintained until it is time to achieve better prices or move them over long distances. The need for cold storage solutions globally is created by changing lifestyles and demanding processed or packaged foods. In this business, the initial investment is high, and thus, a bigger chunk of procurement is essential (2)

Over the last half-century, few real estate assets have boomed, like self-storage units. The cubicle-filled nondescript warehouses have become integral to the way Americans organize their lives. Nationwide, there are over 2.3 billion square feet of total profitable self-storage space. The $38 billion business, with a 7.7 percent annual growth since 2012, has shown steady expansion. Looking at the current data from the self-storage industry, new investors are still entering the industry. The existing owners are broadening their portfolios and sites. The combination of forces driving growth and profit in the self-storage industry is, without a doubt, worth an in-depth look.

Growth of the Business in the Cold-storage space

The market in 2019 was valued at 88 billion dollars and is expected to reach a value of 116 billion dollars by 2025, with a CAGR of 135 percent over the 2020 to 2025 forecast period. Due to the rise of increased urbanization and the improved economic outlook across regions, growth in this industry is expected to be positive during the forecast period. The growth of new enterprises has led to these factors. One of the significant factors driving the market growth is the increasing rate of urbanization (3). The growing urban population in cities with more renters who move around more frequently means smaller and increasingly expensive living spaces. London can also be an example of this trend, with its population hitting a new all-time high of eight million in 2015. 

Capacity of cold storage

By 2030, the population might be more than 10 million. Market growth is being positively increased by the improved economic outlook in the United States, Europe, and Asia countries. In the United States, economic growth is constantly being driven by ongoing innovation, R&D, and capital investment. 21,000 crore will be invested in setting up or upgrading cold storage facilities in the next 4 to 5 years to address stockpiling perishable products. There has been a need to modernize existing cold storage facilities, machinery, and technology. Another issue that needs to be resolved is an under-developed value chain for food processing. To optimize the domestic post-harvest value chain and to feed the downstream food processing industry, Crisil Research has estimated investments of 16,000 to 21,000 crore in the sector between 2019 and 2023 (4)

The new investment was expected from private players, according to Crisil Research director Hetal Gandhi, while the government typically supported the industry through subsidies. For instance, with a cap of Rs 10 crore, the Union Ministry of Food Processing offered subsidies at 50 percent of the project cost. Investments of around Rs 20 crore with a payback period of 6-7 years are needed to set up a multi-commodity cold storage capacity of 10,000 tonnes. Undoubtedly, cold storage forms the most vital horticultural value chain for the downstream food processing industry after harvest. India’s existing cold storage capacity is pegged at 37 to 39 million tonnes.

The multi-commodity cold storages cater for meat & poultry, seafood, dairy products, fruits & vegetables, and pharmaceuticals in addition to potatoes. Typically, EXIM-focused products occupied 65 to 70 percent of the country’s cold storage, she reported. “This is due to strict quality requirements in the countries to which they are exported, requiring temperature-controlled storage and use of reefers across the value chain.” Crisil also expects the cold storage industry to grow at a CAGR of 13 to 15 percent over fiscal 2019 to 2023, driven primarily by increasing demand for processed foods, fresh fruits & vegetables, and seafood bio-pharmaceuticals 2019 to 2023 (5). 

Currently, 95 percent of total cold storage facilities are owned by the private sector, three percent by cooperatives, and the remaining two percent by businesses in the public sector. Given that the private sector owns the bulk of the capacity, there is a greater need for central and state governments to take up the opportunity to support the beleaguered industry. The long-term solution to higher farm incomes and the prosperity of farmers, according to experts, is the growth of a viable food processing industry fed by a robust network of cold storage facilities and transport infrastructure to keep farm produce remunerative, maintain moderate retail food inflation and maintain the nation’s food security.

 

Growth of the Business in the Tech space

One of the primary reasons for the data center is the increasing deployment of edge computing, complementing the demand for growth in the storage market. Therefore, due to the advent of digital technologies, the need for infrastructure modernization drives most organizations to adopt new-age storage solutions that can offer better performance, agility, and scalability. Access speed has increased tremendously in the nation, with increasing investments in fiber and IP networks being seen. Bandwidth growth boosts data access and streaming capabilities, and bandwidth is expected to grow rapidly during the forecast period, thereby helping to grow the country’s cloud storage market (6). 

Owing to the enormous presence of banking and financial institutions in the region, India accounts for the largest market share. South India, however, is expected to emerge in the coming years as the fastest-growing region, supported by a high and rising concentration of SMEs. Secondly, during 2018-2023, India’s cloud storage market is projected to grow at a CAGR of around 42 percent. Increasing investments in 4G and 5G networks, coupled with the booming FinTech sector, are the key factors expected to drive the market, which is likely to boost cloud storage demand due to increasing data usage levels.

Data storage space revenue

In the third quarter of 2019 ending September, India’s external storage market vendor revenue grew by eight percent year-on-year and stood at 91.8 million dollars, a new report said. The professional services, banking, government, manufacturing, and telecommunications industries contributed 83 percent of this quarter’s total external storage market. With a 32 percent share of vendor revenue, Dell Technologies continued to be India’s market leader in Q3, followed by Hewlett Packard Enterprise with a 12 percent market share (7). The digitization wave has driven the demand for data storage, and Western Digital is one of the companies with a broad product portfolio that ticks almost all boxes. According to IDC’s latest enterprise storage systems tracker for the third quarter of 2019, India’s external storage market, including external hard drives, SSDs, pen drives, and personal cloud storage drives, saw eight percent growth year-on-year. For WD, this makes India a key market.

 

Growth of the Business in the Self-storage space

In 2019, the Global Self Storage Market was valued at 87.65 billion dollars and was expected to reach a value of 115.62 billion dollars by 2025, with a CAGR of 134 percent over the 2020 to 2025 forecast period. The (8) growth in this industry is expected to be positive during the forecast period. Rowing urbanization is one of the significant factors driving market growth positively. The growing urban population means smaller and more expensive urban living spaces and more renters who move around more often.

Homeowners and consumers are moving intriguingly regarding their material possessions in the current scenario. Housing market trends favor downsizing to tiny, compact living spaces such as condos, prompting house owners to decide whether to keep or ditch larger items. A few building types have boomed globally in many developed countries, such as self-storage lockers. Over the past half-century, they have proven to be one of the highest revenue-generating real estate sources. Many baby boomers, the population born between 1941 to 1965, are preparing for retirement and looking to move from big houses to compact condo units.

The factors supporting the demand for self-storage throughout the region are increasing population density, improving economic conditions across the Asia-Pacific region, aging populations, and changing cultural norms. The emergence of new players in unexplored Asian regions, such as India, is a significant addition to the market’s growth. For example, to capitalize on the growing demand for storage facilities, the Orange self-storage company based in Bengaluru, which is also considered the Silicon Valley of India, recently announced its plans to expand its presence to several other Indian cities.

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My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

Disclaimer: The views, thoughts, and opinions expressed in the article have been curated for our audience and does not warrant a 100% accuracy. All the information mentioned in the article is subject to change according to the changing viewpoints. Feel free to reach us at [email protected] for any change or copyright issues.

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Abraham George
Abraham George
My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

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