Space race too costly for car owners

If you think the price of putting a roof over your head has soared, wait until you try to secure a parking space for your car.

The average sales price for a residential parking space in Xi'an is about 170,000 yuan. In some high-end communities in the city's Qujiang district, where this apartment building sits, the price has reached 250,000 yuan.?[Photo / China Daily]

Homebuyers across China are learning the hard facts of supply and demand: too many cars and too few parking spaces.

The price for a parking space has hit a record 400,000 yuan ($61,963) in Xi'an, where the average price of a new home is 5,398 yuan per square meter. Even the average price of a parking space in Xi'an, 170,000 yuan, is 31 times greater than the average square-meter price for residences, by far the biggest differential of seven cities surveyed.

"It's about time the sale of parking spaces was regulated," said Zhang Jigang, director of property market supervision in Northwest China's Shaanxi province. "Some developers have been making excessive profits and this has affected social stability."

The Shaanxi Housing and Urban-Rural Development Department issued the country's first directive on the sale of parking spaces on June 10. The regulations allow market forces to set prices, but ban overpricing. They also say that the annual increase in prices must be below that for housing.

In China, developers may sell underground parking spaces only to property owners in their residential development and only in a structure that wasn't built for civil air defense. (A certain percentage of underground space must be built as bomb shelters, depending on the size and population of a city.)

Many developers know this, Zhang said in an exclusive interview, "so they choose to sign rental contracts with property owners for 50 years or more, and make property owners believe they have ownership over the parking space, which they actually don't".

So the new directive clearly states that if the developers decide to rent parking spaces, the rental contract must be renewed annually. Like any one-year lease, however, it leaves the price open to change each year.

The new directive was issued shortly after Honorable Place, a residential development in central Xi'an, announced in late May that it would sell its parking spaces for 400,000 yuan. Many property owners were furious. Some protested outside the Shaanxi government building, holding up banners saying they were "ripped off by developers" and that the developers should be punished.

Bureau takes action

It's more than a parking-at-home problem in Xi'an, which is about 300,000 parking spaces short of what it needs. These cars lined up outside a supermarket, waiting for someone to leave and open up a space, about 8 o'clock on a weeknight. [Photo/China Daily]

"I've been pinching and scraping my whole life for my son's apartment," said Ma Xiaoqing, 53, who recently got the key to the apartment she bought at Honorable Place.

Ma bought the apartment last year at 8,000 yuan per square meter, for a total of more than 1 million yuan ($155,400), which is nearly her life savings.

"The developer informed us that underground car parking spaces were available to buy, and then we were told the price had risen to 400,000 yuan each." There is no way she and her son can afford it, she said.

At that price, Ma's parking spot would cost about 40 percent of what she paid for the apartment.

The developer, Xi'an Gaoke Shifan Industrial Investment Corp, said the price was set by the market and a discount was not possible, Ma said.

She recalled that when she was about to pay for the apartment, the sales agent said the parking space cost about 150,000 yuan. By May, the price had nearly tripled. "It is ridiculous," she said.

Neighbor Wang Yuqing, 38, echoed her sentiment. "As no ground-level parking is provided, we'll have no place to park if we don't buy an underground parking space," he said.

Wang believed the price change was a deliberate ploy by the developer. "We are virtually forced to pay the extra fortune."

A detailed specification distributed by the developer lists parking spaces at six price levels, from 170,000 yuan to 400,000.

Liang Xiaogang, deputy manager of the developer's marketing department, said only nine of the 706 parking spaces were priced at the highest rate, because they are larger, and all of them had been sold. The price of all the parking spaces averages out to 280,000 yuan, he said.

"It doesn't concern us that owners were told the parking space would be sold at around 150,000 yuan," Liang said, "unless they can provide evidence supporting their version."

The Shaanxi housing bureau disagreed. On July 11, it fined the developer of Honorable Place 530,000 yuan ($82,400) for misleading homeowners about prices and for selling its parking spaces before obtaining permit to do so.

In Shanghai, the pricing department recently issued regulations that urge property developers to explicitly list the price and number of parking spaces in a development and post them prominently in their sales offices.

Citizens believed such a regulation could be introduced and adopted in Xi'an.

"If the developers make the parking prices transparent in advance, buyers would have an option to consider the parking cost as a significant parameter when they determine whether to make a deal," Wang Xuejiao, 31, of Xi'an said.

'Part of the house'

Three years ago the average sales price for a parking space in Xi'an, capital of Shaanxi province, was around 100,000 yuan. Now it is about 170,000 yuan. In some high-end communities in the city's Qujiang area, the cost of parking spaces has reached 250,000 yuan, and the spaces are sold out

Zhang, the property market supervisor, said the average construction cost of a regular underground parking space is about 3,000 yuan per square meter. An individual parking space takes up about 38 square meters, accounting for supporting facilities such as ramps and aisles. So the average cost of each parking spot is about 114,000 yuan.

"The price of a parking space is expected to go up in the future because the shortage of parking space will become more and more severe," he said. "As more families start to own cars, parking space is not a supporting facility anymore. It's literally a part of the house."

Xi'an, meanwhile, reports a deficit of roughly 300,000 parking spaces in a city where residents own about 1.2 million cars.

"People should not blame property developers for the soaring parking space cost," said Yu Zhongqun, manager of Shaanxi Houtu Property Development Co. "If 10 people fight for one parking spot, of course the price will go up. In short, the supply simply cannot meet the demand.

"The developers prefer to sell parking spots instead of rent them because we can recover the construction cost much faster," Yu said.

According to national standards, three parking spaces were required to accommodate 10 households in a residential development before 2006. Now, six to eight spaces must be available for every 10 households.

Yu thinks that shortages of parking spaces in residential areas will gradually ease in the future and prices will go down. "Let the market do the adjusting," Yu said.

Prices up all over

Jaw-dropping parking space prices have begun to emerge in other cities around China as well as in Xi'an.

In Haikou, capital of South China's Hainan province, a parking space can cost property owners more than 450,000 yuan - an amount that would fetch a small apartment in mid-range communities. That's the price at Haikou's Coast No 1 housing project.

A saleswoman there, who gave only her surname, Huang, said all the parking spaces have been sold. "There are not enough parking spots to sell, and that's why the price has gone up so much," she said. "Some property owners even purchase more than one parking spot."

The situation is worse in big cities such as Beijing and Guangzhou. In some high-end communities in Beijing, the cost to own a parking spot has reached 800,000 yuan.

In downtown Beijing, prices climbed to 200,000 yuan in most developed communities, according to China Real Estate Information Corp, while the average sales price for a Beijing parking space was 140,000 yuan last year.

More than 23,000 parking spaces were created in Beijing in 2010 - but 700,000 new cars hit the road there.

So far in Guangzhou, the most expensive parking spaces sold at 720,000 yuan each at Lanse Kangyuan housing project near Binjiang East Road.

"The price of a parking space in this area had already reached 300,000 yuan in 2008. It's really a nightmare to find a place to park after 6 pm," said Lu Xin, 42, who owns an apartment in the project but cannot afford to buy a parking space. "There are too many cars, and too many people are willing to pay high prices for parking spaces."

The central government has repeatedly stressed its efforts to rein in the runaway property market since last year. It has imposed price control targets on residential properties. But there are no restrictive measures on parking space purchases.

He Na contributed to this report.