Want to see your money grow? Buy a car parking space in Hong Kong instead of a flat
More new cars on the roads but fewer new parking spaces being built
If house values in Hong Kong have been rising for the past 18 consecutive months, then a bigger surprise would be the price of parking spaces, which have grown much faster than homes in some areas.
It all comes down to supply and demand. Similar to the shortage of supply in the housing market, the availability of comparatively fewer parking spaces in the city has resulted in sky-high prices wherever there is demand, according to brokerage firm Mizuho Securities Asia.
A study conducted by the brokerage house in three private housing estates – Provident Garden in North Point, Mei Foo Sun Chuen in Lai Chi Kok and Island Harbourview in Tai Kok Tsui – found that the price of a parking space in these places jumped by an average 167 per cent, compared to just 52 per cent for residential units, in the last six years up to the end of the third quarter.
For instance, the price of a parking spot at Provident Garden appreciated by 257 per cent versus 37 per cent gain for a residential unit.
During the same period, average secondary home prices across the city rose about 84 per cent, according to data from Rating and Valuation Department. Home prices, meanwhile, have gained 10 per cent since January this year.
“It is even normal to find parking spaces transacted at above HK$2 million (US$256,000), and HK$1 million is becoming the entry point for parking spaces in Hong Kong,” said Alun Jin, property analyst at Mizuho Securities.
On Wednesday a parking space at Festival City in Sha Tin went for HK$2.5 million, and in another recent transaction at Tseung Kwan O Plaza, a space fetched HK$2.08 million.
A record was set in June for the world’s most expensive spot, when an 88 sq ft parking space in Upton, in Sai Ying Pun, changed hands for HK$5.18 million.
Jin believes Hong Kong suffers from a serious shortage of parking spaces and that belief is backed by numbers.
Between 2006 and 2016, the number of private cars registered in the city rose by 48 per cent or 189,281. However, the number of parking spaces for private cars increased by only 9 per cent or 54,520 units, according to Mizuho Securities.
The robust and steady growth in private car ownership reflects genuine demand from the fast growing high-income groups, Jin said in a report released on November 14.
According to a household survey conducted by the Census and Statistics Department, the number of households with a monthly income of over HK$80,000 per month more than doubled in the past six years, while those earning between HK$40,000 to HK$49,999 a month increased by less than half.
As a result of investors joining the market prices have gone up further.
Lam Chi-fung, a veteran property investor, who bought and sold several hundred car parking bays for a tidy profit around three years ago, said the trend was being fuelled by cheap money because of the low interest rates. “Such property investments, which are relatively cheaper compared to buying a private flat, are bound to have an active market.”