Hong Kong not only has a reputation for having the world’s least-affordable housing market. Just finding a place to park a car can be an expensive endeavour because of the city’s limited land supply. In 2020, the average transaction price for a Hong Kong car park space was about HK$2.14 million (US$275,700), according to Midland Realty, one of the city’s leading real estate agencies. Post reporter Alkira Reinfrank looked into why car park spaces are so expensive, and how they have become part…
ALKIRA REINFRANK: Hong Kong is home to some of the most expensive real estate in the world, and that includes car park spaces. Just last year, a single car park in the luxury complex behind me sold for a record 6.6 million Hong Kong dollars, or about 850,000 US dollars. As crazy as it sounds, it's actually not that unusual to find an average car park in the city go for more than 1 million Hong Kong dollars.
BUGGLE LAU: Last year, 2020, the average car park was about 2.4 million Hong Kong dollars. That's almost equivalent-- you can buy a decent townhouse in Canada or other part of the world. In 2019, actually, the price was much higher. The average price was about 2.3 million. The price actually increased on average about 86% in the past five years. I think it resembles the performance of the residential unit.
ALKIRA REINFRANK: Prices are being driven up because supply is limited, and there's an increasing number of buyers on the market. And with money to be made from car parks, it's also attracting investors.
BUGGLE LAU: It sounds a little interesting, but in Hong Kong, people actually buy car parks for investment. The interest rate is super low at this moment, you know? Towards the end of last year, the government also lowered the stamp duty for non-residential units. The stamp duty for a car park under 2 million Hong Kong dollars is only $100. That attracts some of the investor who doesn't have a lot of money, but they still want to participate in the real estate market.
ALKIRA REINFRANK: Between 2008 and 2020, the number of private registered cars increased 50% in Hong Kong. That's about 210,000 cars. But the number of available car parking spaces only increased 10%, which is the equivalent of 66,000 spaces.
BUGGLE LAU: The demand is there, but the supplies cannot catch up. If this supply and demand imbalance continue, it is quite unlikely to see the price drop significantly in the short term.
ALKIRA REINFRANK: For people that can't buy a parking space, there's always the option of renting one. But it's not easy to arrange, nor is it cheap. Limited space in the city means that even rental prices are steep. Fees can range from anywhere from 1,900 Hong Kong dollars all the way up to 6,000 Hong Kong dollars a month. That's between 245 US dollars and 770 US dollars. So prospective car owners not only need to factor in car payments, insurance, and fuel, but they also have to budget for the hefty cost of buying or renting a space just to park their car.