Parking lots, an alternative investment
Despite the market’s contraction, garages’ segment remains active due to the strong demand. The amounts to invest are lower as well as the general expenses.The number of cars in this country is growing and there isn’t a lot of parking space. This situation led investors to choose the option of buying parking spaces to try to satisfy the growing demand. Insecurity is another factor that contributes to the growth of this demand. Car owners want their cars to be safe. In 2012 130,000 patents were issued only in Capital Federal and adding the ones issued in the Conurbano the total is 277,000.
Even though the Buenos Aires parking spaces offer is developing, it is not growing at the same pace as the nation’s car fleet is growing even faster. This is key for the business as people is willing to pay good money for that space. A parcel to build a parking lot needs to have double front and this kind of spaces are not common in the city. Some streets are better than other strategically speaking. The orientation the streets run, competitors, if the lot has double front, the possibility of a significant growth in the demand, are all important factors when it comes to invest.
The company Garage Privado has two buildings in Quilmes each one with 140 garages. That is ground floor, three underground floors and three upper floors two blocks away from the train station and in the very center of the city. Ecococheras offers spaces in Congreso for a price of 88,000 Argentine pesos. The company is building parking spaces in Talcahuano 100 in the area of Tribunales with a cost of 203,000 Argentine pesos per space. Another projects located in avenues Cordoba and Medrano are expected to sell garages in 185,000 Argentine pesos. These projects are expected to be a huge success since there are not parking lots in the area. On the upper floors there will be more than 150 apartments and offices and they will need garages. So the demand within the building itself guarantees these units will be rented in no time.
Buenos Aires parking lots profitability is higher than apartments’. Garages spaces would have an annual profitability of 5% while apartments’ is below 3%. Another attractive thing apart from profitability is the stability of this market, since in order to cover the demand in ratio with the number of cars there are registered in the city it would be necessary to build more than 3 million square meters of parking spaces. If the investor does not own a large capital but he or she still wants to invest in Buenos Aires Real Estate, this is a feasible alternative to keep the value of this capital. The most sought-after areas in Capital are Caballito, Once and Villa Devoto, although Congreso, San Telmo, Tribunales, Belgrano and Palermo are also attractive. In Quilmes the cost of a garage space varies from 80,000 to 110,000 Argentine pesos. In terms of rent, a garage space in Capital is around 600 and 1,000 Argentine pesos, depending on its location and accessibility. In terms of return on investment depends on the moment the investor buys the property. If it was during pre-sale or early stages the return may reach 40% of the initial value.
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