Raise your hand if you’ve read about land prices in Metro Manila and exclaimed, “That won’t even buy you a closet!” Or if you’ve parked in a mall, in an open parking lot or a building, and got a shock at the fee when exiting, so now you’re looking for parking on a monthly basis near your office.
In the top CBDs, P1 million will get you one or two square meters — not even a walk-in closet — but in the building’s parking levels it will get you 12 square meters, the minimum size of a parking slot mandated by recent law (the biggest existing is 20 sqm…because Hummers!).
Condo buyers have the option to buy units with parking or not. And, no, even if you had a million pesos, you can’t buy just a parking slot — you need to cough up P10 to P20 million more for a good-sized unit.
HOW MUCH IS A PARKING SLOT?
According to Leechiu Property Consultants associate director for research Francis Adrian Viernes, parking slot prices depend on the location and they do not follow the per-square-meter price of condominiums and buildings in the same area. “Typically, developers follow the market rates. However, the pricing should at least break even to recover the cost of construction. For example, parking slots at McKinley Hill in Taguig are priced at around P1 million regardless of location, be it high or mid-positioned condominiums like the Tuscany Private Estates, Morgan Suites Residences or Stamford Residences.”
Based on publicly available data on secondary listings, the average market price for parking slots are P943,000 in Makati, P1.04 million in Taguig, P723,000 in Mandaluyong, P730,000 in Quezon City, P651,000 in Parañaque and P450,000 in Las Piñas.
POTENTIAL EARNINGS
If unit owners have tenants without cars, they usually rent out their slots to make extra money (obviously they charge lower to tenants who rent only the unit and not the parking). “The rent of parking slots differs per area ranging from lows of P2,500 per month in Cubao to highs of up to P8,000 in the MOA area. Rents, as with residential condos, are affected by market prices,” says Francis.
Owners determine the rental fee by referencing what commercial spaces in the vicinity are charging. “The intuition is, ‘This is what users will pay anyway if they rent outside on a daily or monthly basis.’ Some lessors benchmark their rates to rent posted by other lessors in the same or surrounding buildings.”
He notes that for commercial areas such as those in malls, the fixed rate is around P40 to P50 and “if the fixed rate or the per hour incremental charge is higher, for example P100 fixed rate and P30 incremental charge per hour, this may indicate that the location experiences excess parking demand. Another sign of demand being higher than the supply is the duration of the fixed fee, which is usually three to four hours, but if the duration is only two hours, then that tells you that the location is experiencing excess demand as well.”
In areas where the buildings are mostly residential with fewer commercial or office buildings, such as Parañaque and Las Piñas, rental yields are lower because there is not a huge office market that needs to park their cars while at work.
How much do unit owners charge for their parking slots alone? According to Leechiu data, the average monthly parking rentals are P5,833 in Ortigas, P5,375 in BGC, P4,867 in Legazpi Village, P4,750 in Salcedo Village, P4,700 in Rockwell and P4,625 in Alabang.
Decades ago, you could rent an entire apartment for those prices, but today when you compute the daily rates using a 24-hour period, they come out actually lower, because in BGC, you spend an average of P1,200 per day/24 hours; Ortigas, P813; Salcedo Village, P540; Rockwell, P400; Legazpi Village, P390 and Alabang, P330.
Francis explains, “For residential, demand for parking is higher for cities with stricter parking rules, such as those prohibiting on-street parking for public areas, so a good example would be Makati. Because people don’t want their cars towed or clamped, parking spaces are a must for car owners in these cities. For commercial spaces and offices, it will be in the Central Business Districts such as Makati, BGC and Ortigas. The business districts are usually where most people with cars work and therefore parking demand is highest in these areas.”
Francis tells us an anecdote of parking slot tenants in two “shifts.” He clarifies, “What we know of this is more of personal experience from people rather than an industry practice so it’s a personal commentary: For some office buildings, workers share parking slots especially those with shifting schedules to bring the cost of renting down. For example, in Taguig, office parking can go as high as P6,000 per month and this might be as expensive as the fuel for some of these workers. Some office administrators may allow this although there are those that prohibit this practice as it presents a security issue. Nonetheless, depending on the way the parking access is issued, it may be easier to do this in one way than another. For example, if the office building is simply passing out an ID-pass, then this can easily be transferred from one car owner to another. It’s more difficult with RFIDs but there were cases where the RFID was simply removed and transferred to another car, allowing different car owners to use the same slot on different days/shifts.”
DEVELOPERS AND BUILDING CODES
Francis explains that there are four guidelines developers use to determine the parking to unit ratio for a particular project. There’s the National Building Code (NBC), the HLURB, the city ordinance and market preference.
“Developers need to comply with the stricter of the first three (NBC, HLURB and city ordinance,” he says.
From HLURB, the minimum ratio is one parking slot per eight units if the average size of units in the building is below 22 sqm.; one slot per six units if it’s from 22 to 50 sqm.; one slot per four units if it’s from 50 to 100 sqm., and one slot per one unit if it’s from 100 sqm. onwards.
From the National Building Code, it’s one slot per eight units if the average size is 50 sqm.; one slot per four units if it’s 50 to 100 sqm.; and one slot per one unit if it’s more than 100 sqm.
“The fourth guide is the market preference of buyers, which is usually considered in high-income and luxury condominiums. For example, following the NBC or the HLURB, two-bedroom condos (assuming they exceed the 100 sqm. threshold) get an allocation of only one parking slot. Buyers in these condominiums may have more than one car and may require more than one parking slot so developers do consider this.
Are parking slots a good investment for people who buy units but have no plans of living there? “Unlike residential condominiums, parking slots do not benefit from value appreciation due to improvements around the location. It is even possible that improvements around the area (like better infrastructure) may pull the price of parking slots down. If a condominium is located in an area that has good access to the train and other modes of transportation, people who buy it will not need parking slots.”
Assuming you bought a parking slot for an extra P1 million with your unit, assuming prices don’t change (which is unlikely) and that you are able to rent it out at P5,000 a month continuously to your tenant or an outsider — how many years will it take for your parking slot to pay for itself? Seventeen years! That’s P5,000 x 12 (months) x 17 (years) = P1.020 million.
It’s an investment every potential buyer should think long and hard about. Seventeen years is a long time to break even, but if you’re unsure whether you’re going to lease it forever or live in the building at some point in the future, making money from 12 square meters for now may not be a bad bet at all.
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