Why you're better off buying car parking space
A spot for your vehicle could outstrip the price of the car, and maybe cost you 10 times per square foot what you paid for the flat
If you are thinking of buying a new car, maybe it would be better to forget the idea and just buy the parking space instead.
Consider this: you are young, upwardly mobile and have a couple of children and an aged parent living with you, and it is time to think of buying a car. You like the idea of one of those ubiquitous seven-seater jobs that sell for about HK$266,000.
Oops! Add HK$150,000 or so to that to cover the first-registration fee. Plus licence fees, insurance, and one or two little accessories that you really cannot do without, and we are now closer to HK$450,000.
Still up for it? Well, have you considered, once you drive your new car out of the showroom, where you are going to park it when you get home?
If home is at The Arch, atop the West Kowloon MTR Station, you better have another HK$2.2 million or so handy - three times the price you paid for your car - because that is the price at which a parking space sold for in July this year.
Heading for the slightly more modest Laguna City in Lam Tin? Then you will need HK$1 million - the price paid just last week for a parking space in the housing estate by someone who beat you to the car park.
In fact, last week was a busy one for parking spaces. One sold at Lohas Park in Tseung Kwan O for HK$980,000 - a record for the estate - and another went for HK$960,000 at Whampoa Garden in Hung Hom.
At about HK$1 million for a 2.5 metre by five metre site, car owners are paying the equivalent of HK$80,000 per square metre for the space in which they park their cars - about 10 times the price they pay for their flats.
And if you use your car to commute into work and can still find a parking space in a public car park, you could be paying another HK$5,800 or so a month - based on the Colliers International Parking Rate Survey for 2011, which placed Hong Kong as the fourth most expensive place on the planet when it comes to paying for parking.
If by now you are having second thoughts, then that is exactly what the government wants you to do. Forget about owning a car and use public transport.
Perhaps it might be better to just buy the parking space and forget about the car - and that is what a growing number of property speculators are doing in Hong Kong, says Patrick Chow, head of research at real estate agency Ricacorp Properties.
"A growing number of investors have shifted to buying parking spaces since the government imposed tougher measures to cool home prices," said Chow, citing Ricacorp's own data. It shows that sales in the first eight months of this year matched the total for the whole of last year - HK$2.16 billion - with 3,440 parking spaces changing hands up to August 31, versus 4,404 deals in the whole of 2011.
"Sales this year will certainly surpass last year in terms of volume and value," he said, and since a parking space will often involve a smaller lump sum payment than the down payment needed for a house, the entry barrier to ownership is lower. For instance, investors could borrow about 50 per cent of the price of a car park, and the down payment might be HK$500,000.
By comparison the down payment on a flat, which could be priced at around HK$3 million, could be around HK$900,000 based on a 30 per cent down payment, with the remainder financed with a home loan.
But be warned: while parking space prices are on the rise - and a shortage of supply underpins their value - prices are also closely linked to the economic and property cycle. During the slump in 2003, parking spaces at Whampoa Garden sold for as little as HK$200,000, Chow points out.