Car park sizes are fairly uniform across the country – typically around 15 square metres – as they conform to a New Zealand standard. When it comes to property, the asphalt, concrete or gravel park is the depreciating element while the land
appreciates.
Their scarcity has seen values climb to high levels and, although yields have tightened, rapid capital gains have seen central city car parks delivering double-digit total returns that compare well against those on offer from other commercial and industrial property asset classes.
Two years ago an Auckland car park in the CBD's Quay Regency apartment building on Quay Street sold at auction for $265,000, a similar sale price to some of the apartments.
Spaces in the Sebel Quay West building at 8 Albert Street have sold recently for $120,000 to $125,000. Those in the Heritage Farmers building at 35 Hobson Street now sell for $100,000 to $150,000, with spaces in a number of other CBD buildings selling in the $85,000 to $100,000 range, according to analysis by Bayleys Real Estate.
Parks in the old Farmers car parking building on Hobson Street can be bought on an individual basis for around $75,000. Five years ago they were selling for $45,000. Their 10 percent-plus annual capital gains, with a 2.2 percent yield based on what a selling agent suggested last year was below market rental, gives a total return of over 12 percent. By comparison, total returns across all commercial and industrial property have averaged 10.9 percent over the past five years, according to Bayleys Research.
Tenants of individual parks often sign up for rolling monthly contracts for use of parking spaces. However, with scarcity underpinning ongoing demand, repeat renewals typically see tenants remain for one to two years. Parks associated with residential units generally have longer renewable lease terms starting at six months or a year.
Meanwhile, in the 'bulk' end of the market, Tournament Parking sold 250 car parks on individual titles in a Newmarket building to Wilson Parking for about $65,000 a park in 2017. The car park was generating total annual income of more than $819,000 with a long-term lease running until October 2029. The sales yield was five percent.
Last year the 427-bay Federal Street Car Park was sold vacant without any holding income by SkyCity Entertainment to Australian property group IDC for $40 million – one of the highest CBD land prices, equating to $24,375 per square metre. By comparison, apartment and hotel development land had been selling for $20,000-22,000 per square metre.
SkyCity also sold a long-term concession until 2048 over the 3,200-bay car park at its Auckland CBD casino site to Macquarie Principal Finance Group for $220 million. SkyCity will keep ownership of the land and buildings.
National commercial and industrial director at Bayleys Real Estate, Ryan Johnson, says the supply and demand curve for stand-alone car parking spaces in Auckland was delivering strong capital growth for those holding stock.
"Car parking in Auckland is at a premium. Since 2007, about 800 CBD car parks have been removed, dropping from about 4,200 to 3,400," Mr Johnson said.
"Concurrently, Auckland Council's Unitary Plan is reducing the development of off-street parking to service new office and apartment buildings – instead, encouraging greater use of public transport, and lowering car parking requirements for new developments," he said.
"This approach however doesn't factor in A) That new high rise developments house greater numbers of personnel than the previous structures they replaced, and those people need somewhere to park, and B) Commuters living in urban locations where there are minimal public transport options still have to commute to work in the central business district.
"These factors will only put demand pressure on the existing supply of individual car parks and as a natural consequence of the demand and supply curve, will continue to push their value up."
