HONG KONG – The hottest properties in this frenetic city have no walls, windows or even front doors. Forget condos, apartments and homes.
Real estate investors are scrambling for parking spaces.
Single slots are now selling for more than some modest Southern California homes. Witness the $288,000 paid in November for a parking place in a luxury apartment complex on Hong Kong Island. Or the $166,000 tab for a spot in a suburban development called Festival City. A space attached to an exclusive cliffside townhouse community in the ocean view neighborhood of Repulse Bay fetched $385,000 in March.
And those are just the recorded sales.
Jacinto Tong, head of Gale Well Group, a real estate investment firm, was offered $640,000 each for his two ground-floor parking spaces in an office building in the Wan Chai commercial district. He said he turned it down because he likes parking his Mercedes S500 on prime real estate near the elevator. The other spot is reserved for his driver.
“This market has gone crazy,” Tong said. “These spaces aren’t worth that much money.”
Parking has long been a prized commodity in land-scarce Hong Kong. Tenants outnumber available slots by as much as 20 to 1 in some residential buildings, creating strong demand for spaces. But experts say the recent price explosion is the unintended fallout from a government effort to cool red-hot housing values.
Home prices in the former British colony have nearly doubled since early 2009, driven largely by wealthy buyers from mainland China. A typical 600-square-foot apartment now costs about $577,000, according to property broker Savills.
Under pressure to slow housing costs, the Hong Kong government in the last year introduced curbs aimed at speculators. Starting in late October, a 15 percent “stamp duty” was levied on sales to nonpermanent Hong Kong residents. A tax of 20 percent was imposed on properties resold within six months of purchase.
The result: Investors channeled their money into parking spaces, where the new rules did not apply.
Parking space transactions in November rose more than five-fold compared with a year earlier at 1,640, according to Centaline, one of the largest real estate firms in Hong Kong. The average price of each space sold was $92,307, up 20 percent from a year earlier.
Analysts say Hong Hong’s parking space bubble is bound to burst. But Francis Liu, an economist at Hong Kong University of Science and Technology, thinks the next scheme could be taxi licenses. Their costs have been hitting $900,000.
“Mainlanders like to invest in them because they’re easy to buy and sell,” Liu said.