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Published 18 November 2013 11:25, Updated 21 November 2013 07:46
An aerial view of the Park & Fly station at the junction of Botany Road and General Holmes Drive, where a strata subdivision has proved wildly popular with self-managed super funds.
Self-managed super fund trustees have snapped up 157 single freehold strata car spaces near Sydney Airport for $57,500 each, on a yield of 6.5 per cent, within days of their going on sale.
More than 200 of 450 double tandem spaces, priced at $104,500, have also been sold according to Erle Cramer, a representative of the outgoing owners of the Park & Fly station, Global Property Group.
The net yield of 6.5 per cent per annum is over a five-year lease to the station’s operator, Park & Fly Pty Ltd, which also includes three extension options for five years each. The deal guarantees rental increases of 3 per cent each year except in a year where an extension option is exercised, where the increase will be 4 per cent.
The sell-out of the 157 single spaces does not surprise Brett Macartney of Macartney Real Estate Services, a former McGrath agent who has sold many parking spaces.
“Governments are clearly planning for more public transport use and less private vehicle use, so parking spaces are going to become scarce,” he says.
“A single car space is an accessible way for investors to get into Sydney’s property market.”
Macartney says the 6.5 per cent net yield available at the Sydney Airport station appears attractive. He just sold four spaces in one line of a private parking station at 251 Clarence St in Sydney’s CBD for $54,500 each, on a yield just above 4 per cent. However he points out that the opportunity for rent rises in Sydney CBD stations are often less controlled than they appear to be under the Park & Fly deal.
Parking spaces in the Sydney City Council area are also each subject to an annual levy, currently $2200 after doubling in 2009, and slated for 3 per cent annual increases.
The Park & Fly spaces are in the Botany Bay council area and not subject to that levy, according to Cramer. The net yield of 6.5 per cent is after strata fees and council rates, he says.
Cramer confirms that self-managed super funds are the source of most of the “dozens of deposits” flowing in every day since the Park & Fly strata subdivision opened this month.
The yield on the spaces is similar to the dividend yield currently being offered by the major banks, although SMSFs appear to have been attracted by the secure long-term tenant underlying the Park & Fly deal.
One unknown would be whether Sydney Airport’s slated reorganisation leads to the opening of more car parking spaces at the site, or whether improved public transport links (for instance the removal of the hefty “access fee” to the Airport’s two train stations) reduces demand for parking in future.