Someone asked me the other day about my latest car park article which asked that everyone should buy an additional car park if the condo came with just one. In fact the calculation of price per sf should take in an additional RM40,000. Why RM40,000? There are some developers who are selling lower. If the developer is selling at a lower rate, that’s the best for you, quickly buy. Just so that everyone is clear, there are ‘amazing’ developers in Penang who are already selling an additional car park space at RM50,000. I hope they have reduced their crazy price and be more considerate.
I bought my first additional car park at RM10,500. That was in 2006. I told my brother-in-law to quickly buy one because it is going to be worth the extra money. He did not and we know the typical prices today. Most of the time, the extra car park ranges from RM30,000 to RM40,000 for condos in Penang. Yes, some have started selling it higher. Rental ranges from a low RM80 to RM120 that I know of. Assuming it is RM80 per month, this meant that it’s RM960 per year. How much must we have in fixed deposit to earn RM960? At interest rate of 3.75%, we need to have close to RM25,000 in the bank, untouched for 12 months. In other words, it may be better to pay RM25,000 and get to OWN the car park rather than paying a similar amount per year but never getting to own the car park or benefiting from it.
Now, do you see why RM40,000 seems reasonable? In KL, I rented an additional car park in Kelana Puteri for RM160. I needed to save RM51,600 at 3.75 percent interest in the bank for 12 months just to earn this RM160 / month. Yes, the price of the car park should be in relation to the car park rental of a similar condo nearby. If the rental is low, of course the developer would be selling the extra car park at a lower price. In fact if the rental is low, perhaps that’s because there are lots of space outside the condo to park your car. Do not be fooled though. Number of cars will increase, number of car park spaces will reduce. When supply diminishes, the price would go up. If only you had bought that extra car park earlier. Last but not least, you do not lose. In future when you sell that condo, an additional car park carries with it an extra premium which is equivalent to the price you paid if not higher. Oh yeah, my condo in Penang was sold at a much higher price than even units that were much higher because I had TWO car parks while majority of all the units had just one. Happy deciding, even if the decision is not to buy that extra car park.
written on 7 July 2015
Next suggested article: More car parks please – if you buy condo (updated)
