Car Park Investment - Is it a Scam?

darkidoe wrote: »

If you think logically about it, how could a parking space be an investment of any sort?

Land is finite; it is expensive to create more land, or more space within buildings.

Land available for use near places where people live, or near travel hubs, is desirable because people want to go to those places and then need to put their car somewhere if they have travelled there by car and do not have a self-driving car that can take itself elsewhere, parkup and refuel, and come back to meet them later at zero cost. It is not much of a stretch of the imagination to suggest that people would be willing to pay money to park in a convenient parking space.

With most land and buildings being in use for other purposes (residential and commercial) rather than parking, space that can be used for parking is scarce. To make a car-sized space available for parking there is an opportunity cost (of not being able to enjoy any other of the thousand possible uses for the land or building space).

That opportunity cost ensures that space given over to parking rather than alternative uses will remain scarce, and though there is plenty of 'spare' space on or off the planet in general, if you need to get to Gatwick for a 7am business trip you would not pay very much for a parking spot in the Mojave Desert or on the edge of the Sea of Tranquility ; you would pay more for use of a parking space near Gatwick.

Where's the value in a parking space?

The present value of all future net cashflows that people would be willing to pay, to use it for parking ; or for any other purpose years into the future (e.g. to buy the parking space from you outright together with the other surrounding spaces and put up a hotel on the former car park so that they can take all the future cashflows from that venture).

The only value is only if there are cars wanting to park in it if not it is just empty space.

If it is empty space marked out on a piece of land and is not being used for its intended monetisable purpose (parking) it is 'just empty space' with some maintenance and marketing costs to try to get customers to park on it for a few hours or days or weeks or months. But it is also empty space that is stopping someone from building a hotel or another runway or piece of infrastructure or some other sort of commerical or residential building within that space. So it has value of what someone would pay to acquire it and convert it over to one of those uses

Any why would anyone want to just own space? It is just not a productive investment imo.

Why would anyone want to just own a house. It is just a space that you can eat, sleep, entertain in while keeping warm and dry. Who wants to pay for something like that. I guess buying a house is silly because it is after all just space...

Some people will not want to pay money for a house because they don't have enough money or don't like the location of the house. But they still need somewhere to live, so they pay money to temporarily occupy the 'space' owned by someone else, perhaps for a long term (tenancy on an apartment) or short term (hotel). What's that - someone would pay money on a short term basis to occupy 'space' for their preferred purpose ? Interesting... By jove! That could be the basis of a business model!

It seems like 'why would anyone pay to buy space' is an question asked by someone who hasn't considered the economics of supply and demand - the fact that someone may be willing to pay money to temporarily use it, or to permanently acquire it for their own use (as a parking spot or something else).

Of course, space on some land is worth more or less than others and if demand for parking in a particular location is not very high you may not get a high occupancy rate and if other land exists nearby which is available for parking or could be made available for parking you may see a race to the bottom in terms of the low amount you would be willing to charge per hour to encourage someone to use it. Without doing your own prohibitively expensive research and due diligence into the local market to work out what could be made from a car park in general or from one specific space, you don't really know how much the ownership of a parking space is worth as a fair value.

I know I would be willing to buy a second designated parking space at my apartment block (less than I would pay for a first one, but certainly a non-zero amount of money for a hundred-year lease) and I could make some guesses at what other people might pay and hopefully make a sensible bid if one became available. For a space on a bit of land 'near Gatwick' that's part of a bigger development with a lot of spaces and only a guesstimated level of traffic... not a clue. I could spend £25k on research and still have conflicting ideas. Which is why the companies marketing them, like OP found, offer things like 'guaranteed' rent for the first x years to try to convince people to sign up for their investment scheme.

If you are still thinking "why would anyone see 'space' as an investment, if you think about it, it has no value" you are just being deliberately naive. Of course a space has value, it's basic economics. That's not to say the value is anything like "£25k" which the OP decided to pay.

Here is some text from this week's Deloitte's weekly economics briefing - at this time of year they do a Christmas Quiz:

7. A parking space in the UK sold for £40,000 this year. Where was it?

Mayfair – London
Chelsea – London
Sandbanks – Poole
St Ives – Cornwall

Answer: St Ives. The parking space is within easy walking distance of the beach, harbour and town centre. Parking is at a premium in St Ives, which is a popular location for second homes, and car parks are often full kin summer. There are 970 of the 999 years left on the lease for the parking place.

£40,000 may sound excessive for a parking space. However, it costs £1/ hour to park a car in St Ives. If you assume that the spot is occupied for 12 hours a day for four months of the year (peak season), this saves £1,440, or an implied annual yield of 3.6% on a £40,000 investment. This doesn’t seem bad in a world of low returns.

BananaRepublic wrote: »

Well yes a statement of the bleedin' obvious which you excel at.

What I find shocking is that such schemes require a group of people with some financial and technical knowledge to actively create a scheme which is in effect fraudulent albeit legal.

If it's bleedin' obvious that there is a great deal of money out there for the taking, it's bleedin' obvious that some people will be highly motivated to acquire the necessary financial and technical knowledge to get some of it. You can't find that shocking or in any way surprising -it's capitalism.

You might find it repulsive, abhorrent, disquieting, disgusting, whatever, but Thrug says it has never been any different so nobody should be shocked or taken aback by what they see today. Ponzi's scheme was 98 years ago so by now you should be somewhat desensitised to the idea that someone will be greedy and acquire technical knowledge to harvest the spoils of other greedy people who don't know how to ask the right questions or are taken in by bold advertising claims.