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HONG KONG - An individual car parking space has sold for HK$1.3 million (S$205,029) in Hong Kong, reports said on Monday, as investors seek new ways of making money amid sky-high property prices.
Buyers have turned to parking lots to make quick gains after the government imposed a series of measures last month to try to cool the Chinese city's overheated housing market.
But the soaring price of a car park space is raising concern that money flowing into the city could further inflate the red-hot property market, the South China Morning Post reported.
Tycoon Li Ka Shing's flagship Cheung Kong Holdings made HK$600 million over the weekend after it sold 514 car park slots, according to the Post and The Standard newspapers.
Some of the slots, priced between HK$980,000 and HK$1.3 million and located in the New Territories bordering mainland China, were quickly resold for profits of up to HK$300,000 each, the reports said.
Cheung Kong could not immediately confirm the sales when contacted.
The parking lots reportedly can be rented out at HK$3,800 to HK$4,700 a month, fetching a yield of about four per cent and attracting investors after housing market sentiment was dented by the cooling measures.
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"It's natural as people don't want their money to stay idle in the bank," Mr Wong Leung Sing, research head of estate agency Centaline, told AFP.
"(The measures) force people to turn to speculation in the car park market," he said, adding that current average car park prices were near the peak levels seen in 1997.
The government last month announced a series of measures including raising the special stamp duties for properties re-sold within the first three years of purchase, to try to rein in home prices.
Authorities said the price of small and medium-sized apartments surged 20 per cent in the first nine months of the year.
Investors in HK now target parking spaces
In great demand: The average price of a previously owned parking spot in residential complexes rose 6.7% to HK$640,000 in Q3. - PHOTO AFP
[HONG KONG] Investors reacting to the Hong Kong government's campaign to curb home buying in the world's most expensive market are shifting money into parking spaces, pushing up prices that in high-end neighbourhoods can match the cost of two US homes.
The average price of a previously owned parking spot in residential complexes rose 6.7 per cent to HK$640,000 (S$100,938) in the third quarter, the second highest on record, from the prior three months, according to Centaline Property Agency Ltd.
A space in the exclusive Repulse Bay area sold in May for HK$3 million, the most for a single transaction and more than double the median US home price, according to CarparkHK.com, a website that tallies parking-spot information.
Hong Kong chief executive Leung Chun-ying has unveiled three major sets of curbs on home buying since taking over in July, amid concerns that continued US stimulus would attract more funds into the city and fuel an asset bubble. Apartment prices in the city doubled in almost four years, driven by near record-low interest rates and an influx of money from China.
"There's just too much liquidity in the market," said Simon Lo, Hong Kong-based executive director of research and advisory at property broker Colliers International. "The government has set up a firewall for residential properties, but all this money still needs to find a place."
Home prices gained 4.4 per cent in the third quarter, according to Centaline, the city's biggest closely held realtor by market share. Hong Kong is the priciest place to buy a home, according to broker Savills plc, which compared prices in 10 cities, including New York and London.
Most parking spaces in Hong Kong, including those inside residential complexes, are freely transferable with separate ownership titles from the apartments, according to Hong Kong City Parking, which operates 10 parking garages in the city.
Even so, some garages have rules prohibiting nonresidents from entering and parking on the premises, which lowers the leasing options available to the owners, said City Parking chief executive officer Josh Wong.
Hong Kong banks normally lend a maximum 50 per cent of a parking space's value, compared with 70 per cent for residential properties, according to Kenneth Tsin, head of property loans at Bank of East Asia Ltd. Parking-space mortgages are riskier for banks compared with residential- and commercial-property mortgages, Mr Tsin said.
"They are relatively less marketable than flats and shops, while their values are also less resilient than those of housing prices," he added.
Developers often sell the spaces independently from the residential units. Cheung Kong (Holdings) Ltd sold 514 parking spaces at its Festival City project in the city's north on Nov 24 for HK$980,000 to HK$1.3 million, said Roy Choi, a regional sales director at Centaline.
While realtors post listings of parking spaces for sale and charge fees on deals, few brokers specialise in them because the margin is too small, said City Parking's Mr Wong.
Most buyers go to websites such as CarparkHK.com or ParkingHK.com, which partners with Hong Kong City Parking, for information.
The record for average parking-spot prices is HK$660,000, set in the fourth quarter of 1997, just before the city's last major real estate crash.- Bloomberg
HK investors snap up pricey car parks |
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Hot item: The average price for each parking space in a commercial building near Western is about HK$3 million, higher than the cost of a small apartment in some areas of Hong Kong. - PHOTO: BLOOMBERG
[HONG KONG] Hong Kong investors are snapping up car parking spaces, raising fears of a bubble after government moves to cool soaring property prices last month drove speculators to seek new options.
One investor had put a total price tag of HK$100 million (S$15.8 million) on 34 parking spaces in a commercial building near Western, said Sean Tsoi, a dealer at property development and investment agency AGW Holdings Ltd, referring to an area just five minutes by car from the heart of Hong Kong's financial district.
The average price for each space in the building was about HK$3 million, higher than the cost of a small apartment in some areas of Hong Kong, which is home to the world's most expensive residential and retail property.
"Car parks have become a new hot item," said Hanson Lam, senior property consultant at Midland Realty. "They're overpriced and I worry that there might be a bubble."
Mr Lam said prices of parking spaces had jumped 20 to 30 per cent since the government's latest property curbs in October.
Developers such as Sun Hung Kai Properties Ltd, Hong Kong's largest property developer, and Cheung Kong (Holdings) Ltd, controlled by the city's richest man Li Ka-shing, had sold more than 2,000 new parking spaces over the past two weeks, said Wong Leung Sing, research associate director at Centaline Property Agency.
Mr Wong said sales of new parking spaces had surged about 50 per cent so far this month although he was not alarmed.
"It's a simple logic for investors: if you don't allow me to buy residential properties, then I will turn to parking spaces, and it's still more profitable than putting money in the bank," he said.
Hong Kong leader Leung Chun-ying, who took over on July 1, earlier this month expressed concern over the impact of hot money flows into the city after the US launched a third round of quantitative easing in September.
"Capital is flowing into Hong Kong, into its property market. Some people buy luxury properties, we've seen soaring prices there ... money is also flowing into shops, commercial premises and car parks," Mr Leung said.
An inflow of hot money forced the city's central bank to intervene last month to protect its currency band for the first time since the global financial crisis.
The government imposed property cooling measures on Oct 26 to rein in residential prices, which jumped 20 per cent in the first nine months of this year. - Reuters
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