In 2016, a parking spot in a wealthy London neighborhood sold for £1m ($1.33m). It was an enclosed garage adjacent to the buyer’s £25 million home, but it was nothing more than a flat piece of ground – a parking spot.

Another buyer paid £700,000 ($1m) for a parking space next to his £10 million residence in the affluent Knightsbridge neighborhood. Just compare these prices to those of an average two-bedroomapartment in Chelsea (£1.4 million) and in Knightsbridge (£1.9 million).

It seems a laughable amount to pay for a patch of ground, but it’s very valuable ground when it is near expensive properties. Not having a place to park one’s car is a damn nuisance whether it’s a 1933 Rolls Royce or a 2017 Chevrolet Silverado-1500.

The world-wide parking shortage

Even though it has been estimated that there are five parking spaces for every car in the world, the prime spaces are in short supply. London isn’t the only city in which parking has become prime real estate. The same is true for most large metropolises. A parking space in Sydney went for A$120,000 ($90,900) at auction. That was shortly after another parking space sold for A$260,000 ($195,150).

In Hong Kong’s soaring real estate market, one tycoon owns a couple of spots worth $640,000 each. Similar trends run in Boston, San Francisco, and New York. For the wealthy, putting down six figures on a parking space is as routine as an average homeowner paying a hundred bucks a month in homeowner’s fees.

Local trends drive the prices of parking spots and investors are taking notice. Two types of investor tend to push the London market. The first is the wealthy residential buyer who needs a safe parking space near his home. Residents grab any space that comes available, even if not in covered garages or lots. Even individual spaces on the street can be had for a handsome price.

The second type is the investor who purchases space in order to lease it out at a profit. It is rental property without all the headaches of a building. Much simpler and easier to manage. In London, parking spots return between 10% and 15% on investment.

The American Market

In the large US cities, homeowners looking for a convenient parking spot are driving up the prices. Owned parking spaces are rare in New York, so most car owners rent spaces in garages for $400 to $1,200 per month. Car parks in Manhattan are hard to find because the city requires a “cut curb” permit that allows a car to drive into a garage or parking spot. New York is limiting these permits to reduce automobile traffic with the result that it is hard to create new spaces.

Even so, the demand is growing. Convenience is becoming commoditized, just like everything else. You don’t see the same market in Boise. New York homeowners use their parking spots to enhance the value of their property.

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In 2016, a parking spot in a wealthy London neighborhood sold for £1m ($1.33m). It was an enclosed garage adjacent to the buyer’s £25 million home, but it was nothing more than a flat piece of ground – a parking spot. Another buyer paid £700,000 ($1m) for a parking space...