Car parks set new benchmarks Author: Carolyn Cummins Commercial Property Editor Date: 07/04/2007 Publication: Sydney Morning Herald
A SPATE of car park sales in the Sydney CBD has thrown the spotlight on one of the city's rare investment commodities.
The sector had been off the radar for investors but more landlords are now selling the sites separately.
Already Australand, Mirvac, Ariadne and Mariner Property own car parks in the CBD, with a Mariner trust owning the parking station underneath the Sydney Opera House.
Private investors have recently snapped up two city parking stations for a combined price of close to $30 million in deals which establish new price benchmarks for the sector.
CB Richard Ellis director Gavin Lloyd said car parks have virtually never been made available for sale, hence the overwhelming interest in the assets at 109 Pitt Street and the 1 Dixon Street shopping centre complex in Chinatown.
In the case of 109 Pitt, a private Melbourne buyer had outbid a major institutional investor to secure the deal for a price around $20 million.
The sale price translated to a tight investment yield of about 6.5 per cent.
"These deals will lead to a repricing of car park assets," Mr Lloyd said.
"Investors are recognising that stringent council restrictions on parking in the CBD will drive significant increases in the future value of parking stations."
Underlining the value of such assets, Macquarie Bank recently paid $1.95 billion to buy UK company National Car Parks from private equity firm 3i Group.
National Car Parks owns half the privately operated off-street car parks in the UK, and is the second-largest provider of car parks to British airports and the largest car-park provider to railway stations there.
The 109 Pitt Street deal was negotiated on behalf of Abacus Funds Management, which strata-titled the Pitt Street office building but kept the 114-bay car park as an investment.
Mr Lloyd said the sale price equated to $177,00 per car space, a record.
"There was strong institutional interest, but at the end of the day the asset was snapped up by a private investor who was able to act swiftly and decisively," Mr Lloyd said.
An increasing number of private investors were flooding the market, with many having switched out of the equity market to target commercial property investment opportunities.
Mr Lloyd said the increased buyer demand had led CB Richard Ellis to establish a new private client division with a focus on Asia Pacific growth.
"Private investors have really come to the fore [in this sector in] the past 12 months," Mr Lloyd said.
"They're now playing in the space that has traditionally been the lower end of the institutional market."
In another private deal, Sydney's Hyperion property investment syndicate has outlaid $9.2 million for the 93-space car park in Chinatown's 1 Dixon Street shopping centre, owned by Accord Holdings, the Australian property investment and development arm of Singapore's Lian Huat Group.
The price equated to about $100,000 per car bay.
Accord has taken a 10-year leaseback over the shopping centre's car park, paying an annual rental of $750,000.