With developers offering discounts on car parking spaces, some home buyers are skipping homes in favor of parking lots.
That was Midland Realty's finding, with the agency recently reporting strong demand and active transactions in the sale of parking spaces at Tai Koo Shing.
One investor reportedly shelled out about HK$11 million to buy eight car parks at Tai Koo Shing for leasing out.
Alex Yau Pang, the chief district sales director for Island East at Midland Realty, said the customer initially intended to invest about HK$10 million on a two-bedroom unit at Tai Koo Shing for long-term rental purposes.
However, due to the recent availability of car parks in the popular estate - which had been leasing them out en masse to home owners in the estate before deciding to put a stop to the practice in 2020 - at discounted prices and their appealing rental returns, the customer decided to switch.
Based on the going rate of HK$5,000 a lot, the eight car parks would collectively yield a monthly rental income of HK$40,000, an appealing return that is double the about HK$20,000 one would get for a two-bedroom unit in Tai Koo Shing.
That compelling arithmetic played a pivotal role in prompting the switch in investment strategy by the buyer.
Tai Koo Shing, a traditional blue-chip residential development on Hong Kong Island, boasts a substantial middle-class population.
With the ratio of residential units to car parks being around five to one, demand for parking spaces is high in the area.
Given the current market caution over home purchases, the 30 percent discounts for parking spaces and their relatively low investment cost have made them a solid alternative investment option.
Following the start of car parking space sales in Tai Koo Shing at the end of June, more than 650 spaces have been sold.
Midland Realty suggests that the remaining 300 or so parking spaces will be sold out soon.
Data from the Land Registry indicates that there were 738 transaction registrations last month for car parks - an increase of 98.9 percent compared to the 371 in June.
The value of car parks sold amounted to HK$1.37 billion, a surge of 88.2 percent compared to the HK$730 million in June.
Both of these figures represent 14-month highs.
Midland Realty chief analyst Buggle Lau Kai-fai said there were 4,426 transaction registrations in the overall property market during the period, representing a decrease of more than 7 percent over June, the fourth consecutive month of decline as well as a seven-month low.
The total value of these transactions amounted to HK$32.97 billion, showing a drop of nearly 17 percent over June and making it the fourth consecutive month of decline, reaching a six-month low.
This indicates that in July, the registrations for car parking spaces outperformed the broader market both in terms of quantity and value in an exceptional performance.
