Parking spaces are too expensive
In recent days, a parking lot of a luxury mansion in Ho Man Tin, Kowloon, has traded at a record-breaking 6 million yuan, and it has on many fronts of financial media. The author remembers writing an article on “How to Determine the Value of Car Parking Spaces” (June 15, 2017) last year. It also originated from a parking space for a luxury mansion in West Loop with a turnover of RMB 5.18 million. The difference in time is about one year. The price of these expensive parking spaces will increase by nearly one million yuan. Maybe everyone feels exaggerated? Not yet calculated.
Rare goods have favorable price increases
A friend of the author purchased a luxury flat in the southern district of Hong Kong Island a few years ago. He planned to give his son a place to marry and later the son had other arrangements and the unit would use it for rent. At that time, the developers had only rented all the parking spaces and did not sell them, and later they sold them in small quantities in batches. The price was about 2 million yuan. In May, the tenant of the rental unit informed my friend that the owners sold a small number of parking spaces, each asking for a price of 2.8 million yuan. The tenant stated that he was considering purchasing a parking space for his own use. Because of the actual needs and the fact that the code was affordable, the tenant later “bargained” for $2.2 million.
Friends are senior real estate investors. With sufficient funds in hand, they call the developers to “touch the bottom”. The response is that iron prices are the same. Friends, apart from anything else, purchased two parking spaces at a price of RMB 2.8 million each. After the developers sold two parking spaces, the remaining ones raised the price to 3.5 million yuan. A week later, the tenant had no choice but to deal with 3.5 million yuan, only a difference of 7 days. The price of this parking space increased by 700,000 yuan.
A week later, the extra cost per day was 100,000 yuan, which was even more expensive than the presidential suites of some five-star hotels. In comparison, the parking space for He Wentian, which was sold for 6 million yuan, was the same as that of the previous estate. Parking spaces were sold for 4.9 million yuan in February. The time difference was 120 days, and the additional daily increase was only 10,000 yuan.
Many people will compare the price of parking spaces with residential prices and conclude that the price of a parking space can buy a small residential unit and it seems worthless. The residence can be used for people’s accommodation. The parking space is just parking the car. This money can’t be used. In fact, it is just a question of values and functions. Those who compare the value of residential units to parking spaces are assuming that the money can only be chosen between residential and parking spaces. The problem of housing has not yet been resolved. What should we do to buy a parking space? The reality is that some people can buy homes and parking spaces together, considering the prospect of affordability and asset prices.
This is followed by functional issues. The function of a dwelling is for people to live in. The parking space is for parking vehicles. It depends on what kind of functions you need, or both are needed and can be afforded at the same time. There is no need for direct comparison. If the goal is investment, both residential and parking spaces are commodities, and transaction costs, liquidity, rarity, and potential for appreciation should be considered. In contrast, the transaction cost and value of parking spaces seem to be superior to residential ones.
It is not meaningful to compare prices
If Hong Kong’s land supply fails to meet the current population and future growth, all buildings on the land, regardless of their functions, are rare resources. . Therefore, it is of little significance to compare the prices of parking spaces, public housing, HOS, village houses, housing estates, mansions, detached houses, factory buildings, office buildings, shops, etc. Low reflects only the degree of purchasing power and preferences.
Investors and users “walk” in different types of properties, buy low and sell high, and all of them involve risks. They must be aware of their own risk tolerance and do their best.
The author is the head of private banking and trust services of Hang Seng Bank. He has worked for several international banks. He wrote an article for The Letter/Xinhua to share his investment experience.