HONG KONG is home to some of the world’s most expensive parking spaces but now the lucrative market is tipped to stall this year.
Last year, the prices of the vehicle bays averaged at HK$2.25 million (US$290,000) but analysts and investors said it was likely to drop in the short term amid declining demand and a cooling property market.
The dip in prices is also compounded by the on-going trade war between China and the US.
Lai Wing-to, a vetern property investor with HK$15 billion of assets told the South China Morning Post that Hong Kongers would begin to sell their cars to save money as the economy starts to stutter.
“The economy will be poor. People will sell cars and avoid maintenance costs,” Lai was quoted as saying.
The number of transactions involving parking bays slumped in the second half of the year, from 1,348 in June to 377 in November.
The figure is the lowest seen in three years, the Hong Kong Property Agency said.
Hong Kong Property chief executive Richard Lee said the performance of the parking space market will be affected alongside the broader property market.
“The overall [property] market has been downbeat as buyers expect home prices to drop, so investment sentiment has been dampened. Investors in parking space will [also] adopt a wait-and-see attitude,” he said.
“Existing demand for parking spaces has probably been satisfied. The market is not likely to be very much affected by extra demand [in the short term].”
However, some analysts were more optimistic, saying the demand for parking spaces in urban areas could spike within the next six months due to a short supply.
“Demand has been increasing. Every year, there are more than 40,000 new cars on the road,” he said. “This year, the number of private cars has grown to about 560,000 but the number of parking spaces has been decreasing. A lot of government car parks have been demolished,” Ringo Lee, president of the Hong Kong Automobile Association, said.
“Every car needs about 1.8 parking spaces. I need an extra parking space at work, apart from the one at home, for example.”
Lee added his plans to buy more cars were delayed due to a lack of parking spaces.
While the parking market is tipped for a slowdown, 2018 looks to be a record year for transactions in terms of money changing hands, according to the SCMP.
Centaline property agency said in November, the volume of transactions reached HK15.95 billion and was said to be close to KH17$17 billion by the end of 2018.
“It will break last year’s record of HK$16.13 billion and mark a new historical high,” said Wong Leung-sing, senior associate director of research at Centaline said.