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Curb your enthusiasm
Try this for an alternative investment: parking spaces. Cars need homes too, you know, says Alex Frew McMillan.
"With parking lots going at HK$4,500 per month or more in Central, a space can generate HK$54,000 or more per year in rent."
Here in Hong Kong, residential parking spaces are normally either attached to an apartment and sold with it, or are owned by the developer and rented to tenants. There’s not a particularly active resale market for private spaces. But parking spots in commercial buildings that are divided up by strata title are regularly bought and sold.
Strata-title buildings have a different title for each office, so there will likely be numerous owners of the offices on any one floor, and the parking spaces are often sold off in a similarly partitioned way.
Parking spaces have several advantages as an investment over other kinds of property. The owner doesn’t have any renovation costs and maintenance is minimal. It’s one of the simplest property investments you can find.
There are also fewer problems if the tenancy goes bad and someone stops paying the rent. Whereas a residential property landlord has to wade through a legal minefield before they can get a non-paying tenant evicted, a parking-lot owner can just clamp the car.
“It is harassment for a landlord to enter into a residential property that has been leased to a tenant, and punishable by a HK$500,000 fine and a jail sentence of half a year,” John Au-yeung, a real-estate broker with Fidelity Real Estate & Management Co., notes. “It says nothing about a car park space, which is otherwise just considered a commercial property.”
With parking lots going at HK$4,500 per month or more in Central, a space can generate HK$54,000 or more per year in rent. A space in the New World Tower is up for grabs at a monthly rental of HK$4,200, while Arbuthnot House is a relative bargain at HK$3,100 per month, with some six spaces up for rent.
With parking lots going at HK$4,500 per month or more in Central, a space can generate HK$54,000 or more per year in rent. A space in the New World Tower is up for grabs at a monthly rental of HK$4,200, while Arbuthnot House is a relative bargain at HK$3,100 per month, with some six spaces up for rent.
So parking lots don’t come cheap. One space is currently listed on the market for sale at HK$1.2 million in the Bank of America Tower, which sells its car parks by strata title. That’s a 20 percent improvement over the price they were fetching two years ago. Another is listed at HK$1.9 million – no word from the broker whether it commands a sea view or has nice light to support the higher price.
Those figures and the prospective rentals suggest car-park owners generate a yield of around 4.5 percent on their investment, for very little work.
Market watchers report that the price for parking reflects the overall strength of the economy, with monthly rates fluctuating in a similar way to office space, while daily rates seem to move in tandem with the general economy and consumer spending.
Interestingly, Hong Kong isn’t the most expensive place on the planet for this kind of real estate – the ‘rent’ you pay for parking your car. That dubious honour just went to the City of London, where a space for your four wheels will set you back US$1,166.87 (HK$9,112.18) per month. London’s West End was next, at US$1,135.76.
Hong Kong wasn’t even the most expensive place in the Pacific – it placed fourth, at US$742.40, or HK$5,790, a few bucks short of the rate you’ll pay in third-placed Sydney (US$774.76).
The figures come from the CBD Parking Rate Survey, which real-estate agency and consulting company Colliers International has put together globally for the first time this year. It ranked 64 metro areas in the United States, where it first started tracking parking costs, and 74 in the rest of the world.
There’s a rule of thumb when it comes to paying for those four white lines. It’ll cost you more money in the places where money is made.
“Whether to park for a day or to have access to parking anytime during the month, the world’s top financial centres are amongst the most expensive in the world,” Ross Moore, a senior vice president and director of market and economic research, writes in the report.
That doesn’t really explain how Brisbane ended up in fifth spot, at US$591.63 per month, ahead of Midtown Manhattan (US$585.00) and Tokyo (US$552.00).
Australia is perhaps surprisingly one of the priciest places to park, with three representatives in the top 10 – Perth is No. 8 at US$516.00 per month.
It’s an odd stat for a country with so much empty real estate in its centre. The report explains the exorbitant prices for parking spots in Australian central business districts as a product of the country’s strong dollar and a business climate that has been sent into overdrive by the boom in commodity prices.
“Australia’s booming resource-based economy and surging currency is the primary driver of these high parking costs,” Moore states.
Other than Australia’s unusual prominence, no one part of the world stood out in the parking rankings when looking at the monthly price to park. The top 10 was rounded out by Stockholm and Dublin, with Melbourne at No. 11.
“No one region dominates, with a sprinkling of cities from North America, Europe and Asia Pacific all represented,” Moore writes. “Regions such as Latin America, Africa and the Middle East, while relatively inexpensive, all show signs of becoming more expensive as parking becomes more structured and certainly more in demand.”
There might not have been much of a pattern for the most expensive monthly rates. But Europe is easily the most expensive place to park for a day.
Hong Kong doesn’t even figure in the top ten when you look at rates that way, with quite a divergence between the daily rate for a space compared with the monthly rate.
The City of London will set you back US$68.07 for a day’s parking, ahead of a host of European cities in the top 10 – Amsterdam, London’s West End, Moscow, The Hague, Vienna, Copenhagen, Frankfurt and Helsinki.
In fact, Sydney is the only non-European city to register in the ten most expensive spots per day, in seventh place at US$54.47.
Hong Kong is a relative bargain at US$28.16 for a day, or HK$220, just over half the rate in Sydney. In Asia, Tokyo, Brisbane, Melbourne and Seoul are all more expensive for the day rate.
But it’s the Indian commuters that apparently have it easiest – the cheapest major city to park is Delhi, where a space will set you back just US$1.75 for a day. Jakarta is only slightly more expensive at US$1.89, and had the lowest monthly rate at US$26.07, less than you’d pay for a day in Hong Kong. Manila is also pretty cheap at US$3.80 for 24 hours.
It’s not surprising given the high prices paid at the top end of the scale that parking spaces can change hands for large sums of money and even be turned into something of an investment market.
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