HONG KONG (CNNMoney) — Forget a sea view mansion. In Hong Kong, parking spaces are some of the hottest properties on the market.
Eager buyers in this densely populated city have pushed prices to record highs in recent months, with prime spaces now selling for far more than the luxury cars that park in them.
In May, a single space in a residential neighborhood on Hong Kong Island went for 4.24 million Hong Kong dollars ($547,000), making it the most expensive parking space ever sold in the territory.
The quirky market is being driven by a combination of factors: Low supply, high demand, and speculators who view parking spaces as a potentially lucrative investment opportunity.
“I am surprised how much interest there is on the market about buying and selling parking spaces,” said KK Wong of Hong Kong City Parking. “Five years back, nobody would even be asking.”
With land at a premium, most Hong Kong homes don’t come with a driveway or garage, and even luxury apartment buildings don’t always offer car parking. The result is a total of 683,000 parking spots for a population that exceeds 7 million.
The parking spot craze started heating up a few years ago, when the city government introduced new taxes to help cool the residential property market and drive out speculators.
The strategy worked, but some investors shifted their money into parking spaces, which were exempt from the tax. Owners were able to resell the tiny properties, or rent them out for a profit.
Wong, who operates several parking lots and a listings website, said the flood of new investment dollars pushed prices higher, and further diminished the number of available parking spots.
Near the market’s peak in 2012, buyers were offering as much as $640,000 for a single parking space.
The government eventually closed the loophole, levying a tax that also covered the purchase of parking spaces. “That put some cold water onto the market,” Wong said, “But it’s heating up again.”
The number of registered parking spots sold in August climbed to 956, a 29% increase from July and the highest in 20 months, said Thomas Lam, a senior director at real estate firm Knight Frank.
Because Hong Kong boasts one of the world’s lowest car ownership rates, with only about 62 cars per 1,000 people, most city residents are able to avoid the pain of rising prices.
But having a car is still a must for some Hong Kongers. Owning one car (or several) is a status symbol, and indicates the car owner also has the money to buy a pricey spot to park the vehicle.
“In America, a car is a necessity; in Hong Kong, it’s a luxury — [public] transportation is really efficient,” said Buggle Lau of Midland Realty. “And if you buy a car, you also need to buy a car park.”