There may come a day when car park spaces in many commercial structures are unnecessary. Major parking lot owners shouldn’t worry, though, as parking lots might be put to other uses
Car parks have traditionally had some investment appeal in places with limited space, like Singapore and Hong Kong.
Since users typically have to pay before they can leave, they require less maintenance than commercial or industrial premises, and their arrears rates are also lower.
Also, compared to asset categories like shopping centres, cutting-edge logistics facilities, or data centres, parking lots might not require highly specialised asset management skill sets.
The additional buyer’s stamp duty that is charged when purchasing dwellings does not apply when purchasing parking spaces. And in Singapore, foreigners can purchase parking spaces.
Car park deals
In recent years, there have been a number of deals involving standalone parking lots or properties that are primarily parking lots.
A unit of the Far East Organization of the Ng family purchased the rooftop F&B (food and beverage) unit as well as the multi-story parking structure at the People’s Park Complex in Chinatown in 2021.
The land lease on the site, which had been in effect for almost 46 years, was purchased for S$39.3 million. The car park property, which has 648 places for vehicles and 56 spaces for motorcyclists, is thought to have sold for a gross yield of more than 4%.
Less need for car parks
However, difficulties lurk for car park owners. In order to further Singapore’s car-lite aims, the Ministry of Transport has been lowering the automobile growth rate with the development of the public transportation system throughout time. From 2018, this rate was 0 for all categories, with the exception of Category C for buses and freight vehicles.
Repurposing car parks
The way people use different physical environments will alter as technology develops. Online purchasing disrupts retail centres. The adoption of remote working necessitates a response from office buildings. In ten years, today’s cutting-edge warehouses and data centres might no longer be functional.
Owners of parking lots in commercial buildings can take advantage of the dependable income flow that lots produce in the short run. This is especially true if the houses are in busy areas where parking is difficult to get by. Perhaps more technology can be used to maximise revenue through dynamic pricing.
I am Tyson Yuk, the founder of the blog Commercial Realty Singapore. With over 15 years of experience, my forte is in the commercial and luxury property line. With my blog, I aim to educate, advise and share tips and tricks with potential property buyers and investors to help them make successful property ventures.
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