At a mere 15m2 car parks are tiny slivers of commercial real estate increasing rapidly in value but often overlooked as an investment.

Nestling between or underneath glass and steel office blocks or apartment buildings, car parks generally lack the instant commercial sparkle of other properties to tempt potential investors.

Yet, car parks are the epitome of the low-maintenance, hands-off, passive property investment and the ultimate supply and demand business.

There are few fixtures and fittings associated with them and although the returns are not dramatic they are equal to or better than residential property.

They also give people a foothold in the commercial property sector when they cannot afford to buy a modest office, retail or industrial building.

The myth they are a secondary investment is easy to bust. When it comes to property, the asphalt, concrete or gravel park is the depreciating part and the land is the appreciating part.

Simply looking at the few car parks that come up for sale, particularly in Auckland CBD, reveals how highly prized they are for their reliable returns, rising value and relative lack of complications.

Car parks have a scarcity value because new ones are rare as most local authorities discourage people from driving into town where car parking is now at a premium.

Since 2007, about 800 Auckland CBD public car parks have gone, dropping from about 4,200 car parks to 3,400, leaving office workers with few options – apart from public transport – unless they can afford to buy a car park.

Many councils have opted to ban building of new car park buildings and council planners are also dramatically reducing parking space in new-build office and apartment buildings, so it’s hard to see a sudden drop-off in demand.

Car park sizes are uniform across the country as they conform to a New Zealand standard. Their value has increased significantly over the past two decades.

In 2017 an Auckland car park in the CBD’s Quay Regency apartment building sold at auction for $265,000, the highest price ever. Apartments across the city were selling for about the same price at that time.

Car parks can only be bought by individuals if they are a principal unit, which means anybody can buy them. Many car parks are auxiliary units connected to an office floor or an apartment and can only belong to the office owner/tenant or apartment owner.

Farmers’ car parks are principal units as are Quay West, 155 Queen Street and Commerce Street car parks and a little block in Hobson Street near St Patrick’s Cathedral. They are popular with investors.

Colliers International special projects manager Roger Seavill has sold hundreds of car parks since 2001, many of them the 1,350 individually titled parks in Farmers Carpark on Auckland’s Hobson Street.

Last year Seavill sold an individual park for $100,000, the highest price ever paid in the building. He also sold three pre-Covid for $99,000 each.

The capital growth trajectory is shown in the steady price increases from 1996 when 10 car parks in the building could be bought for $16,000 each and individually for about $18,000 each. Five years ago, 100 parks sold for $50,000 + GST each.

Seavill says they have become popular since investors started chasing yield.

“One per cent in the bank does not impress people.”

At $100,000, an individual car park returns about 2.83% when rates of $793.43 + GST and body corporate fees of $382.94 + GST and the Auckland Council’s $400 annual uniform charge are taken off the income of $70 a week rent ($3,640 a year). If the investor owns a second car park the annual uniform charge does not apply and the return rises to 3.32%. This is in line with residential investment, says Seavill.

In Quay West, he sold a large park of about 18m2 for $165,000 last year.

“About 2001, I had an investor enquiring about buying an individual park in the building. Quay West wouldn’t sell a single park but put 50 on the market. I sold them as one block for about $40,000 each, the new buyer rejigged the rent and then I resold them at $49,000 each. Since then, they have gone up to $140,000 each.”

It is difficult to find car parks for sale and they are regarded as a serious investment.

“I don’t get people ringing me up every day asking me to sell their car parks but I do have a list of clients wanting to buy them.” Seavill has only one for sale.

The explosion of apartments in the city, many without car parks, has increased demand for the few that do become available occasionally, as has the many commuters coming from Waiheke. Investors regard them as an ideal buy, depending on where they are, what part of town and whether they are in a purpose-built building. They are seen as offering a stable cash flow with low overheads.

They provide an essential facility to drivers who are willing to pay premium rates as town and city centre parking growth stalls while car use accelerates year by year, says Seavill. CBD monthly parkers can pay anything from $300 to $800.

Individual car park owners often own tranches in CBD buildings or at the rear of office or retail properties in the city fringe or suburbs. For example, in Newmarket at a site bordering the 277 redevelopment there are about 100 parks with six or seven private owners.

Meanwhile, home owners in areas such as Ponsonby have also been able to get into making money from their properties by renting out their drives during working hours for commuters as many of the suburb’s streets are restricted to parking for residents only.

Outside Auckland, car park sales are equally scarce. Only two residential car parks last year – one on Maunganui Rd in Mt Maunganui sold for $50,000 and one in Omokoroa, which went for $10,250. In 2018 and 2019, 53 car parks sold in Auckland and 30 sold outside of the city in Invercargill, Tauranga, the Western Bay of Plenty, Wellington and Dunedin.

The most expensive outside of Auckland was a space on Clark Street in Dunedin central that went for $100,000.