Prices of car parking spaces in Hong Kong are expected to show slower growth this year, and may fall, as global economic uncertainty stems the sharp rises recorded last year.
'I think prices for parking lots will remain stable or drop slightly by 10 per cent in general this year, as they are usually in line with home prices and we forecast flat prices to fall by the same rate this year,' Hong Kong Property chief executive Richard Lee Chi-shing said.
One reason prices are likely to remain stable or decline is because they rose significantly last year. Prices of prime parking spaces such as those near Kowloon Station, surrounded by luxury homes, rose by 20 to 30 per cent last year, to more than HK$1 million each. The average price rise elsewhere was over 10 per cent.
Lee said investors were also attracted because the additional stamp duty introduced in late 2010 on the purchase of homes had prompted them to look for alternative investment channels.
The weaker economic outlook this year meant investors were likely to be less active in the market, Lee said. 'Parking spaces at luxury developments are more resilient to falling prices. But a drop of up to 10 per cent this year is more likely at housing estates with more small flats and abundant car parking space, such as City One Shatin, Laguna City and Sceneway Garden [in Lam Tin].'
A senior associate research director at Centaline Property Agency, Wong Leung-sing, said 7,731 parking spaces, worth more than HK$4.73 billion, were sold in the city last year. The value of transactions rose 40 per cent from HK$3.38 billion in 2010 and was the highest since 1997, when spaces worth HK$6.73 billion were sold. However, the number of transactions fell 4.5 per cent from 2010, to 8,092.
Wong said many developers sold parking spaces at luxury developments last year, which boosted the total transaction value.
The most deals were done at Oceanaire, Ma On Shan, where 410 spaces valued at HK$234 million were sold; at the Larvotto in Ap Lei Chau, 302 sales worth HK$463 million were done.
Midland Realty chief analyst Buggle Lau Ka-fai said the parking market outperformed residential properties last year. That might not continue this year, he said, but he does not expect prices a steep drop in places.
'The demand for cars and parking spaces is more cyclical than homes during uncertain economic times,' he said.
'If the economy gets worse, people may not purchase new cars and may even give up their cars if they are not a daily necessity, hence it will be difficult for demand to build up.'