18 February 2019
A record-setting transaction by Henderson Land, controlled by tycoon Lee Shau-kee (inset), will fan the flames in the already red-hot commercial property market in Central. Photos: Bloomberg, HKEJ
A record-setting transaction by Henderson Land, controlled by tycoon Lee Shau-kee (inset), will fan the flames in the already red-hot commercial property market in Central. Photos: Bloomberg, HKEJ

Why people who drive to work in Central are worried

Spare a thought for the elites driving to work in Central.

With a commercial property in the area getting sold for a record-setting price, hot-shot executives will find that they may have to shell out substantially more to park their cars in the financial district.

This week we had news that a Murray Road commercial building, which served as a multi-storey public car park until the end of April, has been snapped up by a developer for about US$3 billion. 

Tycoon Lee Shau-kee’s Henderson Land is paying HK$23.28 billion for the property, aiming to redevelop the site into a top-class office tower.

With the cost translating to HK$50,064 per square foot in terms of potential gross floor area, it marked the world’s costliest commercial land plot, a transaction that is bound to fan the flames of the already red-hot property market in the key financial hub. 

Henderson outbid eight rivals, including mainland developers which had been aggressively buying sites at high premiums in Hong Kong in the past two years, in a government tender, propelling the local property index to a new high.

Among the first who will feel the impact will be the people who drive to work and park their cars in the area.

With the Murray Road property, which had been offering 388 parking spaces in a location opposite the signature Bank of China Tower, set to see change in land use, the problem of parking place shortage will become more acute in Central.

The elites working in the financial district, such as senior company executives, are already feeling the heat as they struggle to find a place to park their cars near their workplace. Or discovering that they have to spend a lot more for the parking space.

For instance, a car owner who earlier paid around HK$7,000 per month to park his vehicle at the Bank of America Tower is now asked to shell out HK$13,000 per month to renew his slot.

Edward Chow, former chairman of the Hong Kong Institute of Certified Public Accountants, told Apple Daily that he couldn’t find parking lots even in Sheung Wan, forcing him to shift to public transport.

Car parking fees in Central have gone up 30-60 percent in the past six years, in line with a surge in prices of Grade-A commercial buildings in the same period.

Now, the situation threatens to become worse as property valuations get a makeover following Henderson’s record-breaking deal.  

As of now, the City Hall parking lot offers the lowest monthly rental fee of HK$4,200 while the daily rate in New World Tower is at HK$280. But the problem with these two facilities is that availability of parking spaces is very limited, with most slots taken up in advance. 

Broadly speaking, the car park shortage situation in Hong Kong is the result of imbalance in car population growth in the city compared to parking spaces.

The number of licensed private cars surged 45 percent to 584,000 in 2016 from 402,000 in 2006, representing an annual growth rate of 3.8 percent, according to Transport Department data.

However, the number of parking spaces for private cars rose a dismal 9 percent to 662,000 in the same period.

The limited land resources in Hong Kong, as the Transport Department noted, do not allow the government to endlessly provide additional parking spaces to cope with the continuously high private car fleet growth.

Given the supply-demand situation, the city’s car owners should be prepared to pay more for parking slots in future.

For corporate executives who are fretting about increased expenses, there is at least one silver lining: they will now have one more reason to demand fatter pay packets from their employers.

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EJ Insight writer

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