Group First, one of UK’s leading property development specialists with transactions exceeding £1 Billion, has recently launched the sale of carparks in the proximity of Glasgow International Airport to the South East Asian market. Headed by the two time Malaysia Business Leadership Award winner, Dato Hj Abdul Razak Bin Abd Ghani, Director Group First International and a member of Group First UK.
With the entry level of investment starting from as low as £20,000 per parking lot at 8% guaranteed return per annum, the company has opened up new market opportunities for property investment. Group First celebrated its most successful year to date with a turnover of more than £100 million in property sales in 2014.
Inspire Living had the pleasure of an exclusive interview with Dato Hj Abdul Razak on this unusual business opportunity.
Property is an age-old traditional business practice. In terms of innovation, most property developers would argue that what needs to be done has already been done. Your company seems to have managed to find a niche in the property business model, appealing to an entirely different segment of the market. For example, instead of selling exquisite real estate with a view, your company has choosen to sell car park lots and self storage.
“Glasgow airport car parking investment has proved to be popular, with a £20,000 minimum purchase for a 125 year lease on a space for which a guaranteed 8% return is given for the first two years, with net yields projected to surpass 12% by year 5.”
Explain to us the rationale behind choosing this business direction.
The car parking industry encompasses any structure which facilitates parking at a fee and investment opportunities exist in both the private and public sectors.
Group First is all about innovation, we have been in the market for a long time and since then have sought opportunities within the commercial property sector. No doubt both parking and storage are a niche market in the UK but these are ready markets that are high in demand, amidst the UK housing are now smaller in design with less additional space and an international airport that serves high volume of passengers daily with limited car park space available.
For example, Park First, part of the Group First group of companies, which, in the last 2 years, has acquired and developed 6 car parks including parking sites at Glasgow Airport. The shortage in supply and the heavy demand that should be the hallmark of any car park investment. According to the Master Plan, the airport itself has only 3,490 Short Stay car park spaces and 2,700 Long Stay. That is a total of 6,190 spaces serving 7.7 million passengers in 2014. Over £200 million has been invested over the last 10 years helping make the airport the 2nd busiest in Scotland. Passenger numbers are projected to rise above 16 million in 2040. Park First learnt the value of parking and its Glasgow airport car parking investment has proved to be popular, with a £20,000 minimum
purchase for a 125 year lease on a space for which a guaranteed 8% return is given for the first two years, with net yields projected to surpass 12% by year 5.
Park First is convinced about the strength of the sector and of the benefits of investments in it, although it is insistent on the primary importance of choosing the right site in order to take advantage of the potential profits.
“According to the Master Plan there was a total of 6,190 car park space in Glasgow airport serving 7.7 million passengers in 2014… The shortage in supply and the heavy demand should be the hallmark of any car park investment.”
The subdivision and sale of parking lots is not an entirely new concept. But you brought it to South East Asia. Share with us the track record of this kind of business model around the world.
According to the International Parking Institute, car park investments worth £12.6 billion globally, as estimated by Colliers International. A huge investment opportunity lies within the car park industry. To date, our Malaysian and Singaporean operations have sold more than £1.7 million worth of car park investments.
Park First’s management team have over 20 years personal experience in airport vehicle parking, with some 6000 parking spaces under management as well as experience managing the Strathclyde Passenger Transport (SPT) car parking facility – the largest passenger transport authority outside London with over 100 park and ride sites.
Why is investing in a parking lot a more attractive option for overseas investors compared to investing in an apartment? How does it stack up against other traditional investments such as stocks and bonds?
Car parking space has long been considered as a highly desirable attribute of commercial property such as office buildings and shopping centres, as well as apartment blocks and residential developments. However, increasingly purchasers are viewing parking as an asset it its own right and a secure source of reliable ongoing income.
To be exact, Park First car parks are attractive due to its guaranteed returns and self-sustainable business model. Our car parks were sold at an affordable price, an easy reach to many investors who opt for an alternative property investment. All investors are required to pay in full, minimum price is £20,000 per car park and when paid in full, the security comes with a full title transfer from The Registers of Scotland, under the investor’s name. We believe in diversification when it comes to investments. Our properties don’t stack up against other investments but rather complementing our investor, by adding property ownership and fixed income to his current investment portfolio.
What are the downsides of investing in a car park lot?
In general, the only risk that comes with this is not investing and not taking advantage of a high demand and rental income of airport car park in the UK. In some countries, investors do encounter some currency risks due to the British Pound are on an all-time high, which is just temporary. In the long run, investors have much to gain as their annual rental income and capital gains on re-sale are paid in British Pounds.
How has the market responded to the Parkfirst investment concept in Asia?
Astute investors have begun looking at car parking as a preferred investment. In M’sia and Singapore alone, Park First car parks have sold more than £1.7 million worth of car parks to date. This highlights that many investors responded positively and very quickly throughout every new launch we did.
Many of our investors believed in building a portfolio of uncorrelated assets is high on the list of any responsible investor – the idea being that what affects one investment’s returns and growth, does not affect another in the same way.
We have now begun attracting more institutional investors as well. The concept of spreading risk is at the basis of many sound investment strategies, and the fact that some very large investment entities are making use of car parking assets to diversify their portfolios is a good indicator of how they can be used to reduce potential volatility and dilute risk.