Frenzy over parking slots may be new real estate bubble
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Money-minded Hongkongers will never let go any opportunity to make some quick money. Stocks and foreign currencies or flats and shops invariably have an appeal to those with some spare cash to invest. The latest most-sought item is apparently a parking space attached to a housing site. Despite the subdued economic outlook, a standard parking space in a Tai Wai property has fetched a jaw-dropping HK$1.3 million. It is disturbing to see speculators moving away from residential and commercial property to car parks.
The latest frenzy is no doubt fuelled by government measures last month to dampen soaring property prices. With limited supply and lower transaction levies, parking spaces naturally become an alternative for investors' hot money. So far this year, there have been 226 transactions in which new buyers quickly sold the slots for a profit before completing their purchase. The number is the highest since 1998.
Those who want to have a share of the pie will be happy to learn that the past weekend saw about 40 deals, with one investor pocketing up to HK$300,000 in profit. But for real users, that means a 20 per cent rise in rent. The bullish market is expected to push prices even higher when individual developers start to release more spaces onto the market over the coming weeks.
Arguably, there is nothing wrong with making the best of one's investment in a free market. But there is cause for concern when the per-square-foot price of a parking space begins to outstrip that of the flats above it. That said, it may be premature to call for anti-speculation measures on car parks. Unlike the runaway housing market, which warrants forceful measures to put it back on track, parking is not a necessity that requires urgent intervention from the government.
What goes up must come down. There is no shortage of examples to remind investors of the danger ahead. A burst bubble is always the next step for an overheated market.