There may be fewer cars on the roads as the Hong Kong economy slows, yet car parks still offer a lower-priced entry point for property investors compared to other asset classes.
Insight
Where and how to invest in car parks?
The number of licensed private vehicles in Hong Kong has increased by 48% from 409,000 in 2007 to 606,000 in 2017. Yet, the total number of private car parking spots has only increased 9% from 613,000 to 668,000 spaces over the same period. With demand rising amid a restricted supply, it’s no surprise that public parking in the city is well utilised.
With a scarcity of land in Hong Kong, the government has sought to limit the use of private vehicles and encourage the use of public transport to keep traffic under control. “Its unchanged policy on parking spaces will continue to limit supply, giving impetus for prices to stay afloat,” says Cathie Chung, senior director for research at JLL Hong Kong.
Here are some top considerations for potential investors seeking to diversify their portfolios and buy into this untapped market.
Location – Target car parks that are in sparse supply within sought-after residential complexes or those that are located near shopping complexes with solid foot traffic. Demand for parking spots will likely persist in neighbourhoods that are relatively less accessible by public transportation or those that are in core commercial and shopping districts.
Parking spots that are more accessible – near entrances to car parks and lift lobbies, or those that are located on lower levels in multi-storey car parks – are generally the most popular.
“A recent trend has been the sale of large batches or entire car parks within a development, which may be appealing for larger investors,” Chung adds.
Ownership – Potential buyers should take of whether ownership is restricted to landlords or tenants. Parking spaces are sometimes bundled with residential units for sale. In such cases, there will be less demand because one parking spot might already be sufficient for the landlord or tenant’s use.
Read our ‘Alternative Investments in Hong Kong: A Shift Towards Diversification’ report for more on other alternative asset classes in Hong Kong and potential investment opportunities.