Hong Kong fact of the day

by on June 14, 2017 at 7:33 am in Economics | Permalink

Hong Kong just set another property-price record. This time, it was for a parking space.

A 188-square-foot space on Hong Kong island sold for HK$5.18 million ($664,300), or HK$27,500 a square foot, last month, newspaper Ming Pao reported Wednesday, citing land registration records.

The car park cost more than some Hong Kong homes: Centaline Property data shows a HK$4.2 million sale of a 284-square-foot, two-bedroom home in Sha Tin, in the New Territories, in April.

That is from Fion Li at Bloomberg.

1 The Other Jim June 14, 2017 at 7:52 am

To be fair, 188 sq ft is awfully big for a parking space.

2 Careless June 14, 2017 at 8:46 am

OTOH, 284 feet for 2 bedrooms…

3 Axa June 14, 2017 at 8:01 am

That should be a very special parking spot.

If land is that valuable, the alternative is some kind of automated parking system that reduces the required area…..thus costs.

4 Jay June 14, 2017 at 8:02 am

100% AI controlled vehicles cannot come soon enough.

5 Dan in Philly June 14, 2017 at 12:01 pm

Automated car bubble…

6 Adam June 14, 2017 at 9:47 am

As a someone who grew up with metric units, I have learnt a basic sense of how much an inch, foot, mile, pound, and so on are. Square feet however are still complete nonsense numbers, and I just have to calculate. 188-square-foot is 17.5 square meters, or roughly a 4.2 meter square. So big for one car, but not enough for two.

7 Thelonious_Nick June 14, 2017 at 11:15 am

Wasn’t sure about this, so I did some calculations:

From Wikipedia article on parking:
“normal parking spaces in the city of Dallas, Texas are 8.5 feet [in width]”
” in the United States…most parking spaces will be within 16 to 20 feet [in depth]”

This gives a parking space of 136 square feet.

I have to imagine Dallas and U.S. parking spaces are probably pretty generous by world standards. I bet in HK this would be perfect for two cars.

8 Adam June 14, 2017 at 12:08 pm

A reasonable car like a VW Golf is apparently 4,338 mm long x 1,807 mm wide. If the space is 4.5 m long it’d be 3.9 m wide, fitting two Golfs with a 0.28 m gap between them and no gap on the sides. That seems unreasonable.

The Japanese extra-compact Kei cars are 3.4 m x 1.48 m. I think two of them would fit ok if the space is 4 m long and 4.4 m wide.

9 Dan Lavatan-Jeltz June 14, 2017 at 6:26 pm

It will be used for motorcycles, with multiple levels and a motorcycle ramp between levels. The height of the structure will be limited by the area moment of inertia for steel and to go down anyone can just jump off from any level if they are good at stunts.

10 Scoop June 14, 2017 at 12:13 pm

Good rule of thumb for converting in your mind: 10 square feet are almost exactly equivalent to 1 square meter.

11 Albigensian June 14, 2017 at 10:30 am

Given the purchase price and the nature of the asset, it should be possible to calculate what one would need to charge in hourly rent for such a space, assuming one intended the rental income to cover the debt service and whatever other costs were associated with renting the space.

If the equivalent hourly rent is high enough, at some point doesn’t it become cheaper just to hire someone who’s on-call to drive the car to wherever you happen to be whenever you want to use it?

12 Dan Lavatan-Jeltz June 14, 2017 at 6:29 pm

They are motorcycles and they don’t want to site behind another driver cause it would be really gay. There is no other way to get a spare driver to where the motorcycle is being driven to/from.

13 dbp June 14, 2017 at 6:52 pm

If one normally paid $100/day to park, then it would take about 18 years (not counting interest) to break-even on this space.

14 Thijs June 14, 2017 at 9:47 pm

Assuming zero residual asset value, are we?

15 Steve June 15, 2017 at 12:13 am

Agree. And the guy probably has enough $ that it is worth always having a parking place.

16 mulp June 14, 2017 at 11:32 am

Must be caused by Obama’s jack boot EPA regulations or Democratic big government restrictive zoning…..

17 TMC June 14, 2017 at 1:17 pm

No way, obviously Reagan’s free lunch.

18 Scoop June 14, 2017 at 12:17 pm

Do stories like these belie the claim that zoning deregulation can make even the most desirable places quasi affordable or does HK have more zoning regulations than Id expect of a libertarian paradise?

19 Dick the Butcher June 14, 2017 at 12:39 pm

I wonder if a bank financed the transaction.

An appraiser or credit analyst would need to see the parcel’s sales history and the locale’s comparable sales information.

20 mkt42 June 14, 2017 at 7:48 pm

Pricey sure but reasonably in line with parking prices in Boston, where the most expensive spots go for $300K-$390K:
https://boston.curbed.com/2017/1/26/14373186/boston-real-estate-parking-space-value

I’m a bit surprised that spots in Boston are usually much cheaper, $50K to $88K. I speculate that those spaces may be located inconveniently far from the owners’ homes, reducing their value.

Decades ago the local news in Boston reported that a parking space cost $35K. Which in those days seemed like a lot, but in intro econ exams covering net present value, I’d tell the students to assume that a parking space in Boston cost $3,600 per year to “rent” ($300 per month; they’re surely more expensive than that now). I’d further tell them to assume that the interest rate is 10% per year (interest rates are lower now). And I’d ask them what might they expect to pay to buy a parking space. Voila, agreement between theory and observed data.

Maybe maintenance and upkeep also reduce the value and the price of parking spaces. I’d have expected them to be higher than $50-88K by now.

21 Mark Thorson June 14, 2017 at 11:59 pm

Most of the value-affecting factors seemed obvious, but the difference between an independent parking space and one on the same deed with the lot wasn’t obvious to me. Sort of contradicted by the most expensive space ($850,000) being in a car condo — I suspect the rule applies only on low to midrange spaces and at the high end it’s all about location and quality. If you’re parking a million-dollar car, you don’t care if you can get a mortgage on the space.

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