The soaring price of a parking space in Hong Kong is raising fresh concerns that money flowing into the city could further inflate the red-hot property market.
Despite a subdued economy and a new 15 per cent stamp duty on non-resident and corporate buyers, prices paid for parking spots in Tai Wai have reached over HK$1.3 million - topping the heights reached by the market before the 1997 property bubble. Some owners of parking slots are reselling newly acquired spaces for profits of up to HK$300,000.
Li Ka-shing's flagship developer, Cheung Kong, sold 514 car parks, priced from HK$980,000 to HK$1.3 million, in its real estate project in Tai Wai over the weekend. The firm made HK$600 million from the sales, and, separately, 200 car parks were made available for lease.
Roy Choi, a sales manager at Centaline Property Agency's Tai Wai office, said a handful of the car park owners resold their parking spots at quick profits of between HK$200,000 and HK$300,000, depending on their location. Traditionally, parking places that are near elevators and exits sell at a premium.
Eric Wong, chairman and chief executive of Richburg Motors, a luxury car dealership, said the high prices of parking spaces underscored a policy failure that resulted from the government not extending the additional stamp duty charged on residential property to car parking bays.
"The overall affordability of car parking spaces has been lifted significantly by speculators from the mainland, and the record price level in Tai Wai is very misleading," said Wong.
At a price of HK$1.3 million, he said, a car park cost the same as two luxury multi-purpose Toyota Alphard vans.
Wong said the expensive car parks in suburban areas should serve as a "a warning sign of more illegal parking and [the] intensifying congestion problems ahead".
Since surpassing their previous peak reached in 1997, home prices have once again risen to levels that are beyond the reach of many people.
Patrick Chow, head of research at Ricacorp Properties, said property prices jumped 21 per cent in the first 10 months of the year.
"Property prices now look dangerously overvalued," said Gareth Leather, an economist at Capital Economics, a London-based macroeconomic research house. In a note dated November 16, Leather said "significant price falls in Hong Kong's property market of around 30 per cent are needed and likely before the market returns to balance".