Within Hong Kong’s bustling Central district is a US$640,000 property that sits among the world’s most expensive pieces of real estate. This might sound like a steal, given the fact that Hong Kong is one of the world’s least affordable property markets.
However, the price mentioned is not for a home. It’s even for an office. It’s a 128-square-foot, motor-oil-stained, undecorated slab of parking space. It per-square-foot price? US$5,000 – more than double the average price of apartments in Manhattan.
Jacinto Tong has owned this piece of real estate for ten years. ‘I think this is the best car park space I ever had,’ said the businessman. ‘You can go straight to the office and the elevator in only 20 steps!’
Hong Kong is not new to pricey real estate. According to the latest Parking Rate Survey by global estate firm Colliers, at US$744.72 per month in 2011, the southern Chinese territory has the most exorbitant parking fees in the Asian-Pacific region.
Many analysts believe that Hong Kong’s pricey parking rates are rooted in governmental curbs on the city’s residential market. To cool its red-hot housing market, the government has introduced a series of increasingly stringent policies since November 2010, which made it more difficult for investors to buy or flip homes for a quick profit.
And the regulations have so far produced desired results, said Lau. Over the last 23 months, home sale transactions fell 31%, and as a side effect, the squeeze on residential investors has pushed them into commercial property, like parking spaces, which have no such price curbs yet.
However, Lau cautions against casual investment in parking spaces. If Hong Kong’s economy stalls the first thing people will get rid of will be their cars.
Hong Kong is known for its vast and efficient public transport network, including a 211-kilometre metro, buses, ferries and taxis. According to the World Bank, the city also has one of the lowest car ownership rates among developed countries, with 74 cars per 1,000 people, compared to 802 in the USA and 156 in Singapore.