Finding a parking space in Hong Kong can sometimes be a daunting affair, especially in urban areas.

 

As of February, there were some 688,000 licensed vehicles in Hong Kong, up 6 per cent from a year ago, statistics from the Transport Department show. However, there were some 630,000 parking spaces-450,000 private and 180,000 public, excluding metered parking spaces- at the end of last year, according to the government’s development Bureau.

 

Josh Wong, CEO of specialist website and trader ParkingHK.com, says demand for parking space “varies”. read more

 

 

 

“Location is the key factor that determines how many spaces are needed in a particular area,” he says.

 

Factors such as whether there is a popular shopping centre, an MTR station and nearby commercial buildings determine how many motorists drive to a particular area, he explains.

 

“Most drivers would expect to reach their destination within a five-minute walk from the car park,” he says.

 

“Otherwise it makes little sense to drive.”

 

In urban areas, the typical monthly rent of a secure parking space is about HK$2,000 to HK$3,000, while it costs about HK$1,000 to HK$2,000 to rent a space in the New Territories, according to Wong.

 

But citing a monthly rental deal for HK$7,300 at the Belcher’s, a residential complex in Pok Fu Lam, Wong says the rental value of a parking space depends on location, like everything else in real estate.

 

He says there is a geographical demand and supply mismatch, with some areas suffering a limited supply and others having too many parking spaces.

 

Because of a lack of supply in urban areas, major car-park operators have raised their monthly and hourly rates by 5 to 25 per cent in recent months. A parking space in Causeway Bay now commands as much as HK$42 for an hour during weekends.

 

One indicator of the degree of such a geographical mismatch is the varying utilisation rates of government car parks.

 

According to the Transport Department, government multi-storey car-park complexes in Sheung Fung Street, Aberdeen, Shau Kei Wan, Tin Hau, Sheung Fung Street and Kennedy Town had a utilization rate of more than 70 per cent in January.

 

However, government-run car parks in other locations, such as City Hall(16 per cent), Middle Road(33 per cent), Star Ferry(41 per cent) and Yau Ma Tei(49 per cent), saw more than half of their spaces under-utilised during the month.

 

Due to their good location, temporary open parking spaces in urban areas are in great demand. In Kowloon East, for example, there were 34 temporary open-parking sites as of March, supplying about 6,600 slots. About five of them had a utilisation rate of over 90 per cent.

 

The tenancy of four of them, however, will expire this year to make way for the Kai Tak redevelopment project, which will add pressure on parking spaces in the area.

 

As far as investment is concerned, activity has slowed, notably this year. According to the Land Registry, and figures compiled by Midland Realty, transaction volumes of parking spaces fell 82 per cent year-on-year to 995 in the year to February. For the whole year, 2013 saw transaction volumes shrink by half to about 7,000 from a year ago, after a flurry of sales of residential parking spaces, most of them in the New Territories, by developers in 2012.

 

Nonetheless, most buyers have failed to flip their stock for a quick profit.

 

Investing in car parks should not be viewed as speculative, advises Alvin Ma, an estate agent with Midland Realty based in The Wings residential complex in Tseung Kwan O.

 

“Some buyers who can’t invest in a second home are still likely to turn to the car park market. I have a client living in The Wings who has ended up buying three slots for self-use and as rental property in the past two months,” he says.

 

“Parking spaces are 「sold for」about HK$1 million and can be let for aboutHK$4,000 to HK$4,100 a month here. That works out to a gross rental yield of around 4.8 to 4.9 per cent annually, which is quite a good return,” he adds.

 

There was one exception. A parking space at The Wings fetched HK$1.95 million in March, a record for Tseung Kwan O.

 

“Maintenance cost is very low and you don’t have to worry that your tenant doesn’t pay rent,” Ma says.

 

Kelvin Ng, a solicitor and partner at Yip Tse & Tang Solicitors, says before buying or selling a parking space, buyers or sellers have to check if the Deed of Mutual Covenant (DMC) of the building allows them to do so.

 

“Some DMCs simply don’t allow the car-park space to be ‘alienated’ separately from the flat, and the sale of a car-park space on its own is held to be a breach of the terms of the DMC,” he explains.

 

Another common restriction is that a car park must not be sold to a person who is not the owner of a unit in the building, he adds.

 

Following an assessment of likely demand for parking spaces by the Transport Department, the Planning Department has made certain amendments to its Hong Kong Planning Standards and Guidelines, with regard to the ratio of parking spaces to residential units in private housing estates.

 

In addition to the size of the units and the distance from the MTR, the building density, or the plot ratio, has become another determining factor to the number of car-park spaces to be built in a residential development.

 

If a residential development is allowed to include 100 parking spaces under the old rules, the new rules now require the developer to take the development density into account; the higher the plot ratio, the fewer parking spaces are permitted.

 

In the case of a project with a plot ratio of eight or above, an adjustment value of 0.75 will be used. So the total number of slots in this development will be cut to 75.

 

If a project is located within 500m of an MTR station, the number of parking spaces allowed is 25 per cent less than a location outside the 500m range. Under the old rules, the required difference was 15 per cent.