Property Hunter Magazine August Issue 2014 | Page 28

/// Hot Topic

/// HOT TOPIC

Car Park Investment:
A New Frontier for Sabah

Undeveloped land in the city centre is often used as a temporary car park to address the city’s lack of ground level parking space

Y

ou have driven around the
block for the third time and
you still can’t find a vacant
parking space. It’s been ten minutes
now and you are probably already
late for your appointment but you
doggedly try for the fourth time to
find that perfect spot that is only
steps away from your intended
destination. Exasperated, you decide
to park your car at an undesignated
parking space and silently hope that
you don’t get fined. Or, you head for
the nearest multi-storey car park or
a pay-per-entry open parking lot.
While this scenario may be a
source of annoyance to drivers, it
can be quite a lucrative business
potential for investors. Malaysia
has one of the highest percentage
of private vehicle ownership in
the region and as more jobs are
created in the cities, parking spaces
to accommodate this increase in
vehicles will be scarcer.

28

www.PropertyHunter.com.my

Developers Chuah Swee Guan
and Eric Wong, together with two
other friends Ahamad Latib and Ng
WyMin, formed SCP which stands
for Systematic Corporate Parking
in 1999. The Asian financial crisis
had dealt a blow to the country’s
economy but unfazed by the
situation, Chuah and Wong jumped
at the opportunity to venture into a
business that not many had given
much serious thought.
Chuah spoke about the company’s
first venture into car park
investment in a recent interview
with Star Property where he
recounted how they had bought the
parking bays at Phileo Damansara
I and II, Megan Phileo and Phileo
Promenade for about RM15,000 per
bay, or RM99 million for 6,600 bays.
“When we acquired this business
a lot of people asked why we paid
RM100 million for basement car

parks which nobody can see?
RM100 million can buy an office
high-rise tower,” said Chuah.
“They thought that parking was
a RM1, RM2 thing, but we felt
that there was a future here. The
population in cars is growing and
everybody needs to park.”
Their investment paid off
handsomely with earnings ranging
from RM400,000 to RM500,000 per
month on an investment of about
RM15,000 to build each basement
bay.
Today, SCP owns and manages
12,000 car parking bays in locations
throughout Kuala Lumpur, Petaling
Jaya and Ampang. It also manages
about 30,000 bays in various
other locations, such as the Pantai
Hospitals and for AmBank group’s
buildings. Its two investments in
Kota Kinabalu are the car park at

KK Times Square and Karamunsing
Capital.
The have been consistently making a
profit of RM25 million a year for the
last 10 or more years. The average
cost of construction has however
ballooned up to about RM50,000
per bay which means that SCP
Parking is gleaning a yield of about
6% based on current investment
costs, which is still pretty good.
Car park can be an attractive and
lucrative business venture as proven
by the SCP example. They are lowmaintenance, can be open 24-hours
a day, can operate automatically and
have low refurbishment costs. There
isn’t much in the way of finishes that
become dated over time and they
are very easy to manage. But is this
investment option viable in Sabah?
Street level parking is at a premium
anywhere in Kota Kinabalu.