Would you pay RM142,000 for a 130 sq ft parking space?

Would you pay RM142,000 for a 130 sq ft parking space?

When the property market is very advanced…

People could even invest into a car parking space! Plus they could earn very good rental from it too because the parking rates in the city centre is very high! The stated car parking price is for a car parking space in Melbourne. yes, a typical parking space is around 130 sq ft. (it could be slightly smaller too at 8ft x 16ft) Below image showing the price is from commercialrealestate.com We used AUD52,000 from the below and converted it into RM. Latest exchange rate is AUD1 to RM2.73 (Yes, AUD has dropped from above 3 just last year)

If this price is compared to price in Hong Kong, this is a steal!

Hong Kong’s parking space for all the far away neighborhoods is as below. If we are looking at neighborhoods which are prime, the prices are many times the below. Anyway, assuming it’s HK$560K, this is RM296,000. Yes, for ONE car park space yeah. Good thing is that the car park is covered! It’s near the lobby elevator for example etc.

How do they come to this sort of price anyway?

Below are typical monthly car parking fee in Melbourne.

If we use AUD400 per month, that’s AUD4,800 per year. Within just 11 years, one would have had to pay AUD52,000! In other words, if we could get a loan for this car parking space, the repayment could be lower or higher but at the end of the loan period, the car parking space belongs to us and we stop paying any rental just to park our car. Who knows, if we no longer own a car, then we could rent out the parking space too!

What’s the ROI, if we indeed own such a car parking space?

Imagine paying AUD52,000 in cash and getting a rental of AUD4,800 per year. That’s a ROI of 9.23 percent per year. It’s a very good return, no matter what we are comparing it against. Imagine having this return every year for 11 years and by the end of 12th year, the ROI is 100 percent per year. The renter has already fully paid for the car parking space you bought. The money will continue to come as people would prefer to pay monthly versus daily rates which could be even higher once the person pays daily x 30 days.

Nope, Malaysia has no such car parking space investment potential

I really cannot imagine when we could also have this kind of investment in the future. Maybe it will happen if the car parking prices are tripled? At this moment, just buy any high-rise unit and it will usually come with one car parking space. It’s part and parcel of buying a high-rise unit yeah. If we need more than one, then we will need to buy but that extra space will not cost RM142,000 (like in Melbourne) or RM296,000 (like those far away areas in Hong Kong).

The only time I bought a car parking parcel was a very long time ago. I paid RM10,500 for that one extra car parking space. When I sold my condo many years later, that extra one car park space carried with it a premium of extra RM50,000. Other condos without an extra car parking space could only sold their units RM50,000 cheaper than mine. So, it was an amazing rate of return since I actually paid just RM10,500 for it like 8 years before I sold the unit. I needed two car parking spaces as my wife and I have one car each.

Happy understanding.

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