As flat prices soar in HK, investors park cash in parking spots

MS ESTHER FAN
MS ESTHER FANPHOTO: REUTERS

Car surge has fuelled boom in value of such spaces - making them sought-after assets

HONG KONG • Ms Esther Fan's nest egg is tucked away in an old residential complex on the outskirts of Hong Kong - two parking spaces in a dimly lit carpark alongside dozens of luxury cars and a Mini Cooper with fake eyelashes on its headlights.

Her parking spots, marked out in mustard-coloured paint, have more than doubled in value in the past 18 months, with one surging to HK$1.6 million (S$272,000) from HK$720,000.

Those gains have greatly outpaced the price growth of the flats in the building above them in Tai Wai district, some 30 minutes' drive from the central business district on Hong Kong island.

It took about seven years for the flats, measuring only around 28 sq m, to record the same growth of 120 per cent, according to data from Centaline Property Agency. The flats currently go for about HK$4.7 million per unit.

City-wide, while Hong Kong's private homes roughly doubled in value between 2010 and last year, the price of a parking spot in residential complexes around the city tripled to an average of HK$1.4 million, according to data from an independent website dedicated to the asset, CarparkHK.com.

"Flats are expensive, but their value won't jump 100 per cent in roughly a year," said Ms Fan, who does not drive and rents out both spaces for HK$2,300 a month each. "But that's what's happening with parking spots. It's incredible."

The boom is being fuelled by a surge of cars on Hong Kong's roads and a red-hot housing market that pushes investors to park their money in assets with lower entrance fees.

Over the past 15 months, two-thirds of parking spaces fetched more than HK$1 million, while one in five cost more than HK$2 million, according to data compiled by Midland Realty Services.

Last year, a parking spot inside a luxury residential complex was sold for an eye-watering HK$5.18 million - a record for the city.

INCREDIBLE RISE IN VALUE

Flats are expensive, but their value won't jump 100 per cent in roughly a year. But that's what's happening with parking spots. It's incredible.

MS ESTHER FAN, who does not drive and rents out both her parking spaces for HK$2,300 a month each, on the parking space boom in Hong Kong. She is seen here at one of her spots.

The parking spot's price per sq ft, at about US$3,500 (S$4,670), outpaced the typical 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), according to data from property consultancy Savills.

The only city that could top that is Hong Kong, at US$4,000 per sq ft.

In 2014, a parking space in London's South Kensington went for a staggering £480,000.

A big reason for the parking space boom in Hong Kong is a jump in car ownership. From 2006 to 2016, the numbers of private cars on Hong Kong roads increased 45 per cent, according to a government report last year.

Meanwhile, the number of parking spaces edged up only 9 per cent, contributing to an "aggravating shortage", it added.

Mr Buggle Lau, director of property data and research at Midland Realty Services, said it was hard to predict when the fervour would end. "At this moment I can't see the economy becoming worse, so I don't see a drop in demand. But I also don't see a rise in supply," he said.

While some investors are cashing in, those just looking for places to keep their cars are unhappy about the sky-rocketing prices.

Mr Andrew Ng, 55, said parking woes were a common topic of conversation for him and fellow members of the Classic Car Club.

"It's crazy it takes a few million to buy a grid, a space with nothing, which you can't do anything with apart from parking," he said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 12, 2018, with the headline 'As flat prices soar in HK, investors park cash in parking spots'. Print Edition | Subscribe