Parking Lots as Prime Real Estate: The Rising Value of Car Parks in Auckland

Parking Lots as Prime Real Estate: The Rising Value of Car Parks in Auckland

The Emergence of Car Parks as a Hot Commodity

Central Auckland’s parking spaces are currently in the limelight for their increasing value. A total of ten car parks, located in the Farmers car parking building on Hobson Street, are up for sale. Despite associated rates and body corporate costs, each car park generates between $228 and $280 per month in rental income. In comparison, a monthly lease for a parking spot at Auckland Transport’s Fanshawe Street car park costs $368.

These parking spaces find themselves in high demand due to the upcoming scarcity of parking in Auckland city centre. Auckland Council’s decision to invest $306 million in cycling infrastructure will result in the removal of many on-street car parks, making the available parking spots even more valuable.

Auckland’s Car Park Deficit and the Investment Potential

Ray White salesperson, Grant Elliot, highlights the high demand and limited supply of car parks in central Auckland. This imbalance, he predicts, will only exacerbate as the council continues to remove car parks to make way for cycle lanes. Elliot also notes that the seven-story Downtown Carpark, which has 796 leased parks, is set for redevelopment, a change that will leave many seeking alternative parking.

Investors are now eyeing car parks as potential long-term investments. The return on investment for a $60,000 car park, at a monthly rate of $480, would be less than 101⁄2 years. As per City Sales real estate broker Scott Dunn, despite the pandemic leading to fewer people in the CBD, matching people with car parks continues to be a struggle due to the limited availability.

Car Parks: The Under-rated Real Estate

As Auckland’s borders re-open and people return to the CBD, the supply-demand dynamic for parking spaces is expected to worsen. Newer developments are being built with only a small number of car parks, and there is a growing trend for building without car parks at all. Despite the hope that public transport infrastructure will meet the city’s growing demand, practicality dictates that Aucklanders will continue to need car parks. This ongoing need adds value to car parks as a real estate investment.

The starting price for the Farmers car parks is lower than the prices of other car parks in the complex sold over the last year, which ranged from $82,750 down to $72,500. It is also lower than the median sale price for a car park in Auckland in 2021 and 2020, according to CoreLogic figures. Last year the median was $95,000 from 19 standalone sales, while it was $80,000 the year before.

The Future of Car Parks in Auckland

With the anticipated scarcity of parking spaces in Auckland’s CBD due to council initiatives and redevelopment projects, car parks are becoming a valuable investment. Even relatively expensive car parks, such as a covered car park on Commerce St listed for $210,000 on TradeMe, are seen as a worthwhile investment given the reducing availability of spaces.

As apartments and offices are being built without enough car parking, the supply-demand storm for car parks is only expected to intensify. This unique dynamic presents a rare and unique opportunity for savvy real estate investors to capitalize on a previously under-rated form of real estate.