Will record-setting prices of car parking spaces on The Peak drive other owners to mark up their assets?

worth hundreds of millions

My daughter in Vancouver, Canada recently sent me a message about a parking space at Mount Nicholson, a luxury residential development on The Peak, when it made local headlines. The spot sold for HK$10 million (US$1.3 million), a pricier sum than a starter flat in Hong Kong.

According to more than 40 parking spaces sold by the same developer, the prices reflected some of the highest ever recorded to date. How could a mere 2.5 by 5 meters parking space command such lofty price levels? The answer may be found in the car park-to-flat ratio in the city.

In low-density residential areas such as this one on The Peak, an average of 1.5 parking spaces are stipulated to be provided for every unit. Considering the limited public transport options and the typical apartment size of more than 4,000 sq ft (371.6 square metres) there, high car ownership is a given. The registry shows just that, as some owners with two flats purchased three car parking spaces.

In high-density residential areas, the parking space per flat ratio is normally lower. However, demand for cars is not always easy to predict.

Generally speaking, developers first licence parking spaces to owners and then sell to them when demand is evident. Developers can simply hold onto the spaces as a long-term investment as well. A case in point is a 40-year old estate in Quarry Bay, where the developer only recently offered them for sale to existing flat owners.

Though sales of the aforementioned The Peak development flats dated as far back as late-2016, car parking spaces were not part of the package. Five years on, the developer has only started releasing them via tender submission.

For new low-density developments, developers often sell the flats together with the parking spaces, since the availability of one or two bays is deemed essential to potential buyers. Most buyers do not want to miss out despite the seemingly exorbitant costs, or they would end up having to license or rent the spaces from others.

Considering that the lump sum price of their high-end flats are worth hundreds of millions, a HK$10 million tag may not amount to much for such owners. The Mount Nicholson case illustrates how fully aware the developer was of the flat owners’ eagerness to secure their own parking spaces.

worth hundreds of millions

Picture of the car park in Taikoo Shing, Quarry Bay. Photo: Google Map

The question next is whether these recent transactions will push other existing car park owners to ask for higher prices?

Unlike flats, one cannot make an apple-to-apple comparison for car park prices across different residential developments due to the wide disparity in car park-to-flat ratios.

For high-density residential developments, the demand for car parks correlates with licence rates, age demographics and car park-to-flat ratios.

For low-density developments where car ownership is normally higher, owners are reluctant to part with their spaces even when they do not own a car. They tend to retain them to enhance the marketability of their flats.

So when parking spaces in low-density developments are put to the market, they can fetch higher than expected prices. There is no evidence, however, to suggest that prices in other luxury residential developments have risen sharply since the record-setting prices at The Peak.

worth hundreds of millions

View of a high-end Mount Nicholson flat on The Peak. Photo: Handout

The prices of car parks have risen substantially in recent years as the growth in car registrations outpaced the supply of new parking spaces. For the general public living in high-density residential areas, prices can swing depending on the affordability levels.

In new towns like Tseung Kwan O or Pak Shek Kok where young families prefer to make their homes, the supply of car parks trails the available number of residential flats. This resulted in higher prices than those in other urban areas.

While Hong Kong has high public-transport connectivity, demand for personal car ownership is largely a by-product of economic prosperity and the pursuit of convenience.

In the short term, providing more park-and-ride car parks around the city may help alleviate traffic congestion and reduce air pollution. In the long term, allowing more quality car-sharing platforms and autonomous driving technologies will hopefully help suppress the demand for cars.

Cliff Tse is senior director of valuation advisory services at JLL in Hong Kong.

News Related


Gold Bullion Report: CapitalVia Global

CapitalVia Global’s report on Gold Bullion Last week Gold futures were trading lower, but they were still holding the previous session’s low. After an unexpected boost in US retail sales ... Read more »

Label Lady Gaga and Billie Eilish make debut at Amsterdam fair

A lot of discussion preceded the arrival of UMG on the Dutch stock market. The French media group Vivendi has been under pressure for some time to let its shareholders ... Read more »

Crunch time for huge Chinese firm, but no 'Lehman moment'

Evergrande’s debt pile became a major issue last year when the government began unveiling a series of measures aimed at reining in borrowing. HONG KONG: With the future of Evergrande ... Read more »

Albert Einstein's smoking pipes to be auctioned off

Photo by: Taton Moïse/Unsplash Albert Einstein, the German theoretical physicist, loves smoking, and the pipes he used are all going to be auctioned off. They are expected to fetch at ... Read more »

Hindustan Unilever share price at 52-week high; brokerages see up to 15% upside

Hindustan Unilever (HUL) share price was trading at a new 52-week high of Rs 2,848, adding over a percent in the morning session on September 21. The Nifty has gained more ... Read more »

Ride-hailing giant Didi Chuxing denies executive Jean Liu is leaving amid Beijing's ongoing cybersecurity probe

Chinese ride-hailing giant Didi Chuxing denied a Reuters report that its co-founder and president Jean Liu was on her way out and threatened legal action to fight the “malicious” spreading ... Read more »

NFT fantasy football game Sorare raises $919m from investors including SoftBank, Gerard Pique

LONDON (REUTERS) – Blockchain-based fantasy football game Sorare has raised US$680 million (S$919 million) in a funding round led by SoftBank, with players including Spain’s Gerard Pique and ex-England international ... Read more »

HDFC announces home loans at 6.7% as festive offer

HDFC | Representative image Mortgage lender, HDFC on September 21 announced home loans at 6.7 percent as part of a festive offer. Under  this  special  offer,  customers  can  avail HDFC Home ... Read more »

Indian rupee surges 15 paise to 73.59 against US dollar in early trade

Representative image The Indian rupee appreciated 15 paise to 73.59 against the US dollar in opening trade on Tuesday, tracking the weakness of the American currency in the overseas market. ... Read more »

Own multiple houses? Here's how you should file your income tax return

If you own many houses, then the ‘self occupied property‘ benefit is granted only to two properties as selected by you. The other property/properties are treated as ‘deemed to be ... Read more »

7 in 10 Singapore employers yet to have diversity, equality and inclusion policies: Report

About six in 10 companies have made a headstart toward incorporating DE&I as a factor of their hiring and promotion. SINGAPORE (THE BUSINESS TIMES) – The majority of Singapore firms ... Read more »

Why investors should tread with caution in Paras Defence IPO

The primary market is booming as the recent success of a string of IPOs shows. Considering ample liquidity and low interest rates, the issuers of public issues are in a ... Read more »

Coronavirus Update: India reports 26,115 new COVID-19 cases, 252 deaths

On the 248th day of the COVID-19 vaccination drive, 57.11 lakh beneficiaries received their first shot and 39.35 lakh their second dose. (Representative image: Reuters) India added 26,115 new cases ... Read more »

World Bank review finds ‘pattern of government interference' in scrapped ‘Doing Business' rankings

Weeks before the World Bank scrapped its flagship Doing Business rankings following a damning independent probe, a group of external advisers recommended an overhaul of the rankings to limit countries’ ... Read more »

Nestle India increasing number of female employees; 42% of new hires in 2020 were women

FMCG major Nestle India is increasing the number of its women employees as part of its gender diversity efforts. Presently, around 23 percent of Nestle India’s workforce are women, its ... Read more »

Paras Defence IPO opens today: Should you subscribe?

Paras Defence and Space Technologies has received a ‘subscribe’ rating for its initial public offering from a majority of based on its wide range of products and solutions for defence ... Read more »

US believes in UN, its value: Joe Biden tells Antonio Guterres

US President Joe Biden and his supporters have taken to calling the current virus surge a “pandemic of the unvaccinated.” (Image: AP) The US believes in the United Nations and ... Read more »

After Tesla, Mercedes Benz asks India to reduce import duties

Luxury carmaker Mercedes Benz joined Tesla in voicing concerns over high import duties. It has warned that the customers in India will get “penalised by buying the cars at double ... Read more »

How target maturity funds can be good investments during rising interest rates

There is consensus that interest rates are going to inch up gradually. It is a matter of time. When rates rise, your mutual fund investments are adversely impacted. The reason ... Read more »

Dollar up to 73.5 rubles, euro stands still at Moscow Exchange opening of trading

The euro was registered at 86.08 rubles Read more »

Malaysia to review Spacs rules to profit from blockbuster deals

The review is part of the Securities Commission’s five-year plan, which aims to make Malaysian markets more relevant and efficient. KUALA LUMPUR (BLOOMBERG) – Malaysia is reviewing its framework for ... Read more »

HCL Tech shares hit new 52-week high on 5-year deal with MKS Instruments Inc

HCL Technologies‘ share price added close to 2 percent in the morning session on September 21, hitting a new 52-week high of Rs 1,315.10. The stock was trading at Rs ... Read more »

Investment-led growth unlikely in the short-term despite sops from the government

A quarterly survey of eleven major manufacturing sectors by industry body the Federation of Indian Chambers of Commerce and Industry (Ficci) found that capacity utilisation improved a little by the ... Read more »

Gold Price Today: Yellow metal may show limited upside amid strong dollar

Gold was trading flat in the Indian market on September 21 as investors adopted a risk-averse stance ahead of the Federal Reserve’s policy meeting where the American central bank is expected to offer ... Read more »

Blackpink's pets: Lisa, Jennie, Rosé and Jisoo all own adorable puppies, but which was sent a bespoke Dior bag, and is one of them really named after Exo's Kai?

Blackpink members might be gracing magazine covers, dazzling at red carpet events and landing lucrative deals with luxury brands, but did you know their pets are almost as famous as ... Read more »

From cooking his underwear in a wok to his Michelin star, executive chef of Mott 32 in Hong Kong Lee Man-sing on his 35 years in the kitchen

“My mother’s eyesight was not good, so when I was growing up I had to help my family by doing chores. I could cook simple things like stir-fry vegetables and ... Read more »

Cadila Healthcare share price falls on sale of two brands

Cadila Healthcare share price fell in early trade on September 21 after the company said it is going to sell its two brands – Mifegest and Cytolog. “Zydus Healthcare Limited, a ... Read more »

Are funds that invest in gold mining companies a good proxy for the yellow metal?

The DSP World Gold Fund’s (DWGF’s) net asset value (NAV) has fallen by 26 percent over the past one year (as per Value Research data). Curiously, DSP Mutual Fund has ... Read more »

How Hong Kong's luxury property market adapted to Covid-19 and re-emerged as an attractive asset class in 2021

Hong Kong’s ever resilient property market is having a fruitful 2021 so far. Unprecedented confidence has returned to the market, and sales figures are topping 6,500 per month – not ... Read more »

Require a loan to buy the iPhone 13? Don't buy the smartphone then

The iPhone  13 has been launched. For the Apple aficionados, it is that time of the year when they are more cheerful than usual. The high cost of iPhones deters ... Read more »

Panjon Standalone June 2021 Net Sales at Rs 1.89 crore, up 285.94% Y-o-Y

Reported Standalone quarterly numbers for Panjon are: Net Sales at Rs 1.89 crore in June 2021 up 285.94% from Rs. 0.49 crore in June 2020. Quarterly Net Profit at Rs. ... Read more »

Mahindra CIE Standalone June 2021 Net Sales at Rs 717.98 crore, up 280.72% Y-o-Y

Reported Standalone quarterly numbers for Mahindra CIE Automotive are: Net Sales at Rs 717.98 crore in June 2021 up 280.72% from Rs. 188.59 crore in June 2020. Quarterly Net Profit ... Read more »

Marg Techno Pro Standalone June 2021 Net Sales at Rs 1.35 crore, up 197.78% Y-o-Y

Reported Standalone quarterly numbers for Marg Techno Projects are: Net Sales at Rs 1.35 crore in June 2021 up 197.78% from Rs. 0.45 crore in June 2020. Quarterly Net Profit ... Read more »

Gayatri Highway Consolidated June 2021 Net Sales at Rs 19.44 crore, up 45.51% Y-o-Y

Reported Consolidated quarterly numbers for Gayatri Highways are: Net Sales at Rs 19.44 crore in June 2021 up 45.51% from Rs. 13.36 crore in June 2020. Quarterly Net Loss at ... Read more »

Adani Total Gas Consolidated June 2021 Net Sales at Rs 494.33 crore, up 150.74% Y-o-Y

Reported Consolidated quarterly numbers for Adani Total Gas are: Net Sales at Rs 494.33 crore in June 2021 up 150.74% from Rs. 197.15 crore in June 2020. Quarterly Net Profit ... Read more »

Mahindra CIE Consolidated June 2021 Net Sales at Rs 2,042.48 crore, up 177.71% Y-o-Y

Reported Consolidated quarterly numbers for Mahindra CIE Automotive are: Net Sales at Rs 2,042.48 crore in June 2021 up 177.71% from Rs. 735.47 crore in June 2020. Quarterly Net Profit ... Read more »