A new record low yield for the sale of a commercial car park in Melbourne's CBD has been set at 2.78 per cent, which agents say is being driven by lack of stock.
An eight-storey strata car park at 20-28 La Trobe Street was sold last week for $17.5 million to a local investor. It features 706 bays and is leased to Secure Parking.
Savills director Clinton Baxter, who along with Nick Peden, brokered the deal, said the selling price reflected a strong appetite for the investment, which has compressed yields in recent years. A series of recent sales have resulted in strong yields for the segment.
In August 2012, 222 Russell Street sold for $16.88 million, resulting in a yield of 7.4 per cent. That was followed by 517 Flinders Lane, which sold for $6 million in May 2013 (6.4 per cent) and the sale of 300 Flinders Street in December the same year, for $40 million (6.1 per cent)
"It's a protected market. Council policy is to restrict the availability of car parking spaces in Melbourne," he said. "What that creates is ever-increasing demand for existing facilities."
He said prices were being tested by the "enormous volume of capital coming in from Asia".
In July, Colliers International's national director of research, Nerida Conisbee, told Fairfax Media she believed demand for car parks would continue to outpace supply.
"A lot more people are coming into the city to shop," she said. "At the same time, we're not really getting any dramatic increases in the number of car parks in the city."
Ms Conisbee said the lack of new car parks being built meant that scare supply was pushing up the price of existing offerings.
Data from the City of Melbourne shows that the number of commercial parking spaces in the CBD has dropped 8 per cent in the past six years to just under 30,000.
Data from findacarpark.com.au reveals that the average car park in Melbourne costs just over $50,000, with an average rental yield of 8 per cent.
