Car park properties are gaining in importance – despite digitalisation and technological changes to automobiles
- Experts of Bouwfonds IM, Berlin Hyp, ARCADIA Investment and Q-Park Operations Germany discuss the future of car parks in an online press conference
- The car park trade will show further growth on the investment market
- Banks are financing car parks – albeit with less LTVs (loan-to-value) than standard property classes
- Q-Park operator sees digitalisation as the most important challenge and simultaneously as a great opportunity for the next ten years
- In the next decade the focus will rather be on revitalising old car parks than on building new ones
Berlin, 7 September 2016 – The car park segment will further gain in importance on the property investment market. The main reasons: The advantageous return-risk ratio in conjunction with the underlying macro trends such as urbanisation and the increasing number of cars make investing in car parks attractive for investors. Property financers changed their outlook on the car park trade a few years back and are now also financing car parks. Berlin Hyp expects moderate growth in this segment. A few trends are to be taken into account when deciding to build a new car park: The technical requirements and costs for equipping a car park have risen and will probably continue rising as the operators are clearly focussing on more comfort and the trend in electro-mobility should also be taken into account. An important trend for the coming years is the revitalisation of properties as many car parks – especially in West Germany – are facing the end of their life-spans, structurally as well as regards their concepts. From an operator’s viewpoint digitalisation will comprise the biggest challenge for the next ten years. Consequently the entire parking process will be digitalised in the future – from the online shop for short and long-stay parkers to contact-free identification at the entrance and contact-free payment at the exit, up to having a presence in different parking apps.
These are the main findings of the online press conference held today regarding “Investment, construction and operation – how sustainable are car parks?”in which Martin Eberhardt FRICS, Managing Director of Bouwfonds IM Germany, Gero Bergmann, Board Member of Berlin Hyp AG, Sascha Stabenow, Senior Project Developer at ARCADIA Investment Group as well as Frank Meyer, Managing Director of Q-Park Operations Germany GmbH & Co. KG, all took part.
Growing demand for parking spaces in car parks expected
Martin Eberhardt FRICS, Managing Director of Bouwfonds IM in Germany comments: “In the past few years we have played a part in driving the establishment of parking as a form of investment with institutional and private investors because we are confident in the sustainability of this class of asset. Various macro trends will lead to the demand for parking space also increasing in the future. Next we have progressive urbanisation. In addition we have the increase in the number of cars. According to projections the numbers will further increase in all the most important European states by 2020.” Furthermore the municipalities are limiting on-street parking continually more while the commercial control over parking space is simultaneously expanding. “Needless to say there will be enormous changes due to digitalisation in the next ten years. We nevertheless rather see this as an opportunity” Going on Eberhardt said. “The spreading of car-sharing in the metropolises leads to an increase in the transportation mix. This requires an increase in cars rather than a decrease which in turn leads to an increase in the demand for parking space.
Car park financing has growth potential from a banking point of view
“To lend money for property against security the banks must always take the risk factors into account”, says Gero Bergmann, Board Member of Berlin Hyp AG, “For this reason we only finance car parks which fulfil our ambitious criteria of location, management quality and cash flow. Furthermore we only give a maximum of one LTV (loan-to-value) which is less than with the standard asset classes. As a rule we only loan a maximum of 65 per cent when it comes to car park properties”, said Mr Bergmann. “The financing of car parks has growth potential, but this niche market will not attain the same significance as logistics or hotels. We generally assume that, with reference to risk factors, a strong competitive market will emerge in the parking trade in the next ten years.”
The focus in coming years will be more on the revitalisation of car parks
Sascha Stabenow, Senior Project Developer at ARCADIA Investment Group is an expert in the construction of new car parks as well as the revitalisation of old car parks. “The costs of the fundamental structure of car parks have moderately developed in the past few years. However, the layout and equipping costs have increased drastically. This trend will continue,” is clear to Mr Stabenow. “The main reasons for this are the increasing requirements relating to car park technology and equipping as well as the necessity to take the trend towards electro-mobility into account. In Germany there are already fully-automatic car parks where a car is driven into a slot and then fully-automatically driven to its parking space. According to Mr Stabenow the fully automatic car parks will nevertheless remain a niche market as they are extremely expensive. They would rather be used in metropolitan cities to fill an empty site where it is very difficult to implement other uses. “In the coming years the focus will sooner rest on revitalising existing car parks than on constructing new ones. Especially in West Germany many car parks from the 1960s and 1970s have reached the end of their life-spans”, explained Mr Stabenow.
Digitalisation of the parking process lies in focus for the next few years
Frank Meyer, Managing Director of the car park operator Q-Park Operations Germany GmbH & Co. KG believes that progressive digitalisation will become the main challenge in the next few years. The objective therein: Digitalisation of the entire parking process, from identification at the entrance to the no-cash payment at the exit. “In addition, we have an important task to ensure the development of our own app as well as having a presence in all relevant parking apps”, Mr Meyer continued. Other trends that operators such as Q-Park have to contend with are the ever-increasing size of cars and the prevalence of electric cars. “We are already offering charging stations for electric cars and are contemplating an extension, should the use of electric cars spread further”, says Mr Meyer. Future scenarios with which Q-Park has to deal with are the increase in car-sharing, the development and prevalence of self-driven cars as well as the scarcity of urban parking space. “These trends and the rise in the transportation mix, lead to an increase in the demand for parking space so that paid parking contributes towards the improvement and mobility as well as the quality of life in urban areas.” MR Meyer analyses.
About ARCADIA Investment Group
ARCADIA Investment Group has focused its specialisation on the development of property used for retail and residential properties as well as car parks and underground car parks throughout the entire Germany. In addition to activities relating to its own portfolio, it also implements projects in the framework of joint ventures – amongst others in close collaboration with national as well as a Dutch and a Canadian family office. One of the company’s core business functions is the optimisation, maintenance and expansion of the property portfolio the family businesses. ARCADIA Investment Group currently employs seventeen people and has offices in Leipzig as well as its founding office in Taucha.
About Berlin Hyp AG
Berlin Hyp AG is specialized in large-volume financing for professional investors and housing associations. For these institutions they develop individual financing solutions. As a company affiliated to the German Sparkasse banks they also offer a comprehensive spectrum of products and services. A clear focus, almost 150 years of experience and the affiliation to the Sparkassen-Finanzgruppe distinguishes the Berlin Hyp as a leading German real estate and mortgage lending institution.
About Bouwfonds Investment Management
Bouwfonds Investment Management (Bouwfonds IM) is the Real Asset Investment Manager of the Rabo Real Estate Group. Bouwfonds IM offers innovative investment products for institutional and private investors. Bouwfonds IM manages a portfolio with a total value of 6.2 billion euro which is split into the following divisions: commercial and residential property, communications infrastructure, car parks and farm land. Owing to the fact that their activities demand regional knowledge, Bouwfonds IM collaborates with specialist teams from their Dutch headquarters as well as with branches in Germany, France, Poland and Romania.
Q-Park is one of the leading operators in Europe who operate their own properties, administered properties and leased properties as well as parking properties in the form of a mixed business model. Q-Park is known for its quality standards and possesses a portfolio of almost 6,000 parking properties with more than 860,000 parking spaces and has a strong market position in 10 north-west European countries; in the Netherlands, Germany, Belgium, Great Britain, France, Ireland, Denmark, Sweden, Norway and Finland.