As the population of Australian capital cities grow in record numbers due to recent increases in migrant intake and the mini baby boom, residential areas around CBDs have become even more popular among city dwellers due our appetite to live close to work, public amenities and beaches surrounding our beautiful seascapes, harbour and waterways.
Australian property prices have increase by 20% to the year ending March 2010 as a result of many factors among which were record low interest rates, impending end of the First Home Owner’s Grant, low level of supply, strong consumer sentiment due to Australia’s strong economic performance during the GFC and generous government stimulus under the Rudd government.
What is becoming even more significant is the value of a car spaces in inner city areas, be it public on-street parking or private off-street parking. New residential and commercial developments within a 5km radius of Australian capital cities are becoming increasingly scarce due to ever growing demand and as a result, it will be imperative for residential properties to offer the invaluable convenience of private off-street parking facilities. As it is, Sydney is one of the most expensive cities in the world to park your car in public places when compared to big metropolis like London, Tokyo and New York. Sydney City Council and many Local Government Areas are raising millions of dollars in revenue each year through parking meters, fines and other offences as a result of increasing demand for public parking. Parking in most of Sydney’s CBD areas and city attractions such as the The Rocks, Botanic Gardens, Darling Harbour, King Street Wharf and Woolloomooloo will incur meter charges even during weekends as people converge into the city during these times. An average parking fine in Sydney can range from $66 up to $190 for illegal parking on public disabled parking bays.
In addition, Sydney’s International Airport also has the unpopular reputation of being the most expensive airport to park your car and worst service among major Australian capital cities. Sydney International “T1” terminal parking fees is $7 for the first half hour or part thereof.
Source: Colliers Global CBD Car Parking Survey
Indeed, many new residential apartment developments sprouting out around Sydney do not provide car spaces for the smaller studio and 1 bedroom apartments. Sydney suburbs which enjoy strong demand for apartments without parking facilities include Potts Point, King Cross, Darlinghurst and Surry Hills to name a few. These suburbs are right in the heart of Sydney and are close to cafes, restaurants, shopping, public transport, entertainment and commercial precincts.
Apartments close to the CBD without a car space will only appeal to a more narrow tenant market – people who are more transient within cities who have decided to do away with a car and prefer public transport instead. These people may include the expat executives market where they may be looking for a rental property close to the city or workplace for short periods of up to six months.
In the long term, this may mean higher tenant turnover and a less favourable investment proposition when compared to properties with private parking facilities. From an investment point of view, it certainly pays to have secured private parking facilities for properties within a 5km radius of capital cities as the demand for car spaces can only become even more intense and scarce in the future.
There are also numerous companies who seek out residential and commercial car spaces either for lease of for sale. Such companies include findacarpark.com.au, carparking.info and rentmycarpark.com.au where parkers can search residential or commercial car spaces by location throughout Australia and investors can search for relatively cheap positive cashflow investments in car spaces. One may find the price of a car space for sale around Sydney CBD to be anything from $45,000 up to $100,000. Generally, there are no Council rates involved except for quarterly strata levies. Return on investment can vary between 5% up to 12% per annum.
A recent survey by Susan Wellings of the Sydney Morning Herald shows how much value a car space can potentially add to the value of a property:
|Bondi||$100,000 – $200,000|
|Paddington||$100,000 – $200,000|
|Mosman||$100,000 – $500,000|
|Surry Hills||$100,000 – $250,000|
|Annandale||$50,000 – $100,000|
|Balmain||$50,000 – $100,000|