Parking garages 'most stable' property investment

Investment in parking garages is the most stable form of real estate investment as the segment is least sensitive to the economic climate due to continuing scarcity and rising parking charges, according to new research published by Bouwfonds REIM.

Over the past five years, investments in parking real estate have achieved better annual returns than investments in other forms of real estate. According to IPD figures, parking delivered very healthy returns of 10.86% per annum in the period 2004 to 2009 in the Netherlands, despite the economic crisis. In addition, investors are doubly sure of returns from parking garages due to the expected increase in the number of cars and rising parking charges.

'The demand for parking spaces is rising sharply. With a growing fleet, the scarcity of parking space will continue to be an important issue, especially in city centres where public space is already scarce,' said Léon Muller, head of research and investment strategy at Bouwfonds REIM.

'Population growth and the growth in the number of households contribute to a further increase in the number of cars, while the restrictive parking policy of many local authorities only increases the pressure. Car park owners are benefiting from this favourable outlook.'

Car ownership and the number of kilometres driven per 1,000 inhabitants have risen particularly sharply in Eastern Europe, while countries such as Sweden, Switzerland and the UK have seen a slight fall.

Parking charges have risen faster than inflation, by a factor of around 2.5. The increase in charges in Europe was just over 5% and in some cases even exceeded 10% on a yearly basis. Muller: 'It is clear from municipal policy plans that charges will continue to increase in the years ahead. It should, however, be noted that there are clear differences between individual countries, cities and even individual locations.'