Tuesday, 20 June 2017

The Parking Spot Bubble

Parking spots are a hot commodity in Hong Kong for the uber rich
Hong Kong property analysts are saying people should invest in parking spaces because their value has risen 270 percent in the last 12 years.

A few days ago, a business executive paid a gobsmacking HK$5.18 million on a parking space in a residential development in Sai Ying Pun. It's not even Central.

One parking spot was sold here for HK$5.18 million
In 2005 the average price for a parking spot was HK$396,000, but as of April this year it's HK$1.47 million.

During the same 12-year period, flats rose 256 percent.

The reason for car parking spaces rising higher in value is that three government car parks have closed for redevelopment -- Tsuen Wan Transport Complex Car Park, the Middle Road Multi-storey Car Park in Tsim Sha Tsui, and Murray Road Car Park in Central.

Since 2013, the city has lost 1,888 parking spaces due to changing land use.

For the first five months of this year, prices for parking spaces have gone up 12 percent to an average of HK$1.46 million. During the same period, 3,013 parking spaces changed hands for a total value of HK$4.3 billion.

But if you're looking to break into the property market, owning a parking spot before having a roof over your head is absurd.

Murray Road Car Park (above right) has closed in Central
And how much rent can you charge for a parking spot? Not as much as if you rented the same amount of space to actually live in. It would take you forever to make back the money you paid for the spot. Not really financially viable.

Which makes parking spaces only in the realm of the super rich who need places to park their cars.

Real estate is not a game us ordinary folk will ever win at -- the rules keep changing to make it near impossible for us to have any kind of leg-up on the system.

So maybe speculating on parking spaces is the next big thing. Get ready for a really big bubble.


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