Car parks remain big business

Author: Enzo Raimondo, CEO
Date: 21 Jan 15

Despite the trend in some suburbs such as Brunswick for a reduction in car parks in new developments and incentives such as share car spaces and bicycle racks to encourage residents to abandon car use, car parks remain big business.  A single car parking space can add considerable value to an inner-city property.

In Melbourne, city and St Kilda Road apartments with a car space are selling for up to $100,000 more than those without. Over the past year the price difference between a one-bedroom flat with a car park and one without increased by 16 per cent to $98,000.  In 2011 the difference was $62,750.

For a two-bedroom flat the difference in median price is $90,000 – up by 17 per cent from $77,000 last year, according to an REIV analysis which included all apartment sales in both new and existing buildings over the past 12 months.  In 2011 the difference was just $30,000.

With the increasing density in the Melbourne CBD and surrounding areas, car parks are becoming a luxury. And it seems that despite the availability of public transport buyers are  prepared to pay a premium for them.
Agents report some buyers without cars buying apartments with car spaces in the hope of making money by renting them out or selling them off.

But buyers should study the title or titles carefully – the car park may be on a separate title – and familiarise themselves with the owners corporation rules for the block. They should be aware of potential pitfalls – for example, rules may specify that the space can only be sold or rented to others within the building. And if the car space is on the same title as the apartment, it may not be able to be sold separately.

The rules may also control the use of car spaces for other purposes such as storage units. They sometimes specify the size of these, and may even rule them out completely.

It’s also worth being aware that, under planning legislation, the authority granting the permit for the building can impose restrictions on apartment car parking.

It is not just in Melbourne that car parking is increasingly big business and a potentially lucrative investment.

Recently The New York Times reported underground car spaces in New York were selling for $1.1 million for a 99-year lease – more per square metre than the apartments above them and four times the $217,800 US median price for a house.

The sale of more than 300 Sydney carpark spaces in a single weekend late last year was also a timely reminder of the growing attractiveness of car parking as a property investment, with parking availability there under pressure from increasing car numbers. The spaces in the Mascot car park, near the airport, sold to local and overseas investors with some buying several double spaces at $104,500.

In Melbourne, where the number of people working and living in the city is growing faster than the number of car spaces, inner-city car parks sell for upwards of $50,000. One inner city agent, reporting strong bidding on a particularly sought-after carpark within a Spring Street complex, saw the space sell to the successful bidder for $98,000 – and that was during the last housing boom, in 2010.