One can hardly deny that parking spaces in urban areas are in scarcity. But that they’re selling for the price of a luxury apartment is definitely a shocker. In May this year, parking spots in a residential complex surged to a whopping HK$1.6 million from HK$720,000 about 18 months back.
These gains have outstripped the growth in the price of the flats in the building above them in Tai Wai district, a 30-minute drive from the central business district on Hong Kong Island. What’s even more surprising is that it took about seven years for the flats to record the same growth of 120% – the flats are now selling for about HK$4.7 million per unit.
Across Hong Kong, private homes roughly doubled in value over 2010-2017 and the price of a parking spot in residential complexes tripled to about HK$1.4 million. Although the flats are expensive, their value won’t jump to 100% in roughly a year. But that’s what seems to be happening with parking spots.
What’s behind the price hike?
This price boom is primarily being powered by a deluge of cars on Hong Kong’s roads. A flourishing housing market is also pushing investment in assets with a low entrance fee – last year, two-thirds of parking spaces raised more than HK$1 million while one in five raised more than HK$2 million. A parking spot in a luxury residential complex was sold for a record amount of HK$5.18 million.
In the USA, the parking spot’s price per sq. ft. is about US$3,500 (S$4,670), outpacing the per sq. ft. price of prime residential flats in major cities like Tokyo (S$4,380), London (S$2,360) and New York (S$2,100). The only place competition can come from is Hong Kong – at US$4,000 per sq. ft.
A major reason for the surging price is an increase in car ownership; between to 2006-2016, private cars on the road increased 45% even as parking spaces only went up by 9%. The shortage of spaces is thus, not surprising. While some investors are cashing in on the real estate boom, those looking for places to park their cars are unhappy about the sky-rocketing prices. Looks like parking woes are not leaving us for some time.