Parking Propels Real Estate Bubble in Beijing

What's causing underground parking spaces to go for $160,000 in Beijing? Quartz reports that demand, narrow roads, resident disenfranchisement and old zoning law give developers the upper-hand.
May 26, 2014, 11am PDT | Michael Newton
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Gwynn Guilford writes of $100,000 parking spaces commonly found in Beijing. Underground parking contributes to China’s real estate speculation, led by “greedy property developers” and growing demand for automobiles. The article stresses that two variables account for why Beijing has some of the world’s most expensive parking spaces: growing car ownership and lack of proper legal knowledge and enforcement means residents pay exorbitant rates—perhaps on parcels they already own.

Thee real backstory here, according to Guilford, is that: “Zoning plans haven’t kept up with Beijing’s embrace of car culture; many slightly older developments were designed without allotting ample parking spaces," and on-street parking is rarely permitted.

The issue is more nuanced: “Beijing has among the lowest ratio of roads per overall land area of any major metropolis in the world…“ and with a population of 7.5 million cars—or a car for every 2.5 residents—private parking is prioritized. While the government vows to reduce a million cars by toying with the license plate lottery, that impending policy has created a "car buying surge" and with it, a "parking spot bubble" in real estate. Values even 30 miles from Beijing’s core cost more than the car itself.

Guilford details further Chinese property laws and elaborates on why residents are willing to pay inflated rents. This, she writes, is due to lack of knowledge about property law or the legal channels to enforce the law, meaning that developers contribute to the scarcity and exact skyrocketing prices “…for a parking space that [residents] legally own.”

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Published on Sunday, May 25, 2014 in Quartz
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