The availability of parking is rarely a main concern for homebuyers, but it is becoming an increasingly important factor in property values, explains Adrian Goslett, CEO of RE/MAX of Southern Africa…
Despite the infrastructure developments to improve South Africa’s transport system during the build up to the Soccer World Cup event, our public transport system is not yet at the level of development which would see most city dwellers give up their vehicles. A case in point is the recent stranding of thousands of people who participated in Car Free Day on 20 October due to a technical problem with the Gautrain.
As such, the majority of commuters must, by necessity, have their own vehicles. And in most households both partners are breadwinners which means the family often has two cars. The result is an estimated 9-million cars on our roads, growing by 50 000 each month as the population, and particularly the middle class, continues to grow. All these cars must be parked somewhere.
"In cities around the world, parking is a major issue due to the rapid development within CBDs, the already limited space and the cost of providing parking in areas where land values are high," comments Goslett. "But even in residential developments, space constraints and land costs have resulted in many sectional title schemes relying on street and public open space parking to address the issue."
Goslett explains that in line with the theory of supply and demand, constrained supply and raising demand results in higher prices. "Adequate parking arrangements definitely add value to a property, but its independent, intrinsic value is also increasing as demand increases. Hence, the importance of parking is also affecting issues such as insurance and property finance."
Sufficient and suitable parking at any property, whether residential of commercial, will affect the value of the property, the use of the property as well as the rental that can be charged.
"Increasingly, buyers are considering the lack of a garage on a property, or insufficient parking bays for the number of occupants in a sectional title unit, as a drawback. They recognise the inconvenience of parking situated some distance from the house or unit, the increased theft risk for a vehicle not locked up in a garage as well as the possibility of weather damage if a vehicle is parked in the open," says Goslett.
The increase in the intrinsic value of parking is also evident from the findings of a recent global CBD parking rate survey, which revealed that London - at R7114 per month - is the most expensive place in the world to park a car. Other cities in the survey’s top ten list of most expensive places to park include Hong Kong, Sydney, Perth, Oslo, Amsterdam, Vienna, Athens and Copenhagen.
"In South Africa, parking is also becoming an increasingly sought-after commodity. Parking rates in South African cities range from around R500 per month in Johannesburg’s CBD to more than R1000 per month in Cape Town’s CBD," says Goslett. "A parking bay in Johannesburg’s CBD will cost around R50 000 and, even in the south of Johannesburg, a parking bay in a sectional title scheme can fetch up to R80 000.
In Clifton, Cape Town, the price goes up to as much as R500 000 for a single parking bay. In fact, last year, a small garage in Clifton was sold for a record price of R2-million.
"Some sectional title owners have sold or ceded their parking bays in light of the high prices achievable, but no longer having a parking bay will definitely negatively affect the value of the unit in the long term."
The importance of parking has also extended beyond these factors to impact the homeowner’s insurance and even the ability to obtain finance for a property purchase.
"The latest SAPS crime statistics show that in the 2009/2010 reporting period, 71 776 vehicles were stolen – that’s an average of almost 6000 vehicles a month. Understandably, insurance companies will apply a higher rating to an insurance policy for a vehicle which is not parked in a locked garage and even more so if the vehicle is parked outside due to a lack of parking on the property," notes Goslett.
"In addition, two of the major banks in South Africa recently announced that finance will no longer be granted on sectional title units without on-site parking. This shows that the banks have also recognised the growing importance of parking in determining the value of a property."
Homebuyers will do well to carefully consider the availability and suitability of the parking offered by a property.
"When viewing a property, assess the existing parking facilities and the possibility of extending these. Is there adequate protected parking for the family’s vehicles? Is there sufficient parking for visitors? Parking may not be at the top of a buyer’s most important criteria, but it can make a significant difference to the long-term value of the property," concludes Goslett.
Credit: South African News