Investing in parking spaces and garages is increasingly recognized as a stable and long-term profitable investment. Growing urbanization, the increase in the number of vehicles and the lack of parking spaces in major cities make this industry particularly attractive. Private investors around the world, including the Balkans, are increasingly recognizing the potential of this branch of real estate.
It is enough to hear the information that the value of this industry is estimated at around 4.5 billion dollars, with the projection of an increase in value up to 11.5 billion in 2031. In Europe, there are also very well-known brands in this industry whose primary activity is the management of private parking lots.
Practices and perspectives in the world
In developed countries, such as the USA and Western Europe, investing in parking facilities is a standard practice. Private companies often operate large parking garages near business districts, airports and sports facilities. These facilities generate steady income due to high demand and flexibility in pricing, especially during peak periods. With advanced automation and online booking technologies, operating costs are minimized, while customer experience and profitability are enhanced.
Some of the benefits for cities are more efficient management and lower capacity maintenance costs. While users profit through better service, and if the market is well organized, the competition can lead to more favorable prices.
The situation in the Balkans
In the Balkans, especially in larger cities such as Belgrade, Zagreb and Sarajevo, the parking space market is still not fully developed, but it shows enormous potential. The increased number of cars in urban centers, along with insufficiently developed infrastructure, creates a serious deficit of spaces. The introduction of regulations such as parking charging zones and the growing interest of local authorities in public-private partnerships open up space for private investors.
What has been on the market for a long time is the monetization of already existing private parking lots. Here, we are primarily referring to shopping centers, which managed to monetize their good locations additionally through charging for parking. This charge is usually introduced to relieve capacity and represents only a minor part of the revenue, but it cannot be ignored for several reasons.
- Parking is a big part of the customer experience
- The income can really be significant
- A large area just goes to the parking lot
Airport case
An interesting case of private investment in parking facilities is the parking lots in the vicinity of the airport. Owners of land near the airport noticed the lack of parking capacity at the Belgrade Airport and opened private parkings. The profitability of this model is proven by the large number of newly opened parking lots of this type. This investment is of course a completely unorganized ad-hoc initiative, but it actually makes money for someone.
Of course, there are also certain private managers of public parking facilities. These are the companies that were given the management of street and public parking lots by the city. There are only a few of them in the region, but they do exist. When you look at their efficiency and the efficiency of public companies, you can see a drastic difference in the way of doing business and profitability.
The best investment segments
Depending on how much money you have, there are different investment options. Lately, private owners more and more decide to invest in a parking space and rent it out. This practice definitely exists, but it’s not as widespread as the next segment we’ll cover.
Private individuals still prefer to buy an apartment because someone can live in it later and it has a higher utility value.
On the other hand, large investors still do not have the initiative to invest in large garages. We can perhaps look for the reason in the unwillingness of the local real estate market for such an idea. But also in the lack of legal and local regulations, which are not clear enough on this issue.
However, we cannot imagine that building a garage in the center of a big city would not be worthwhile. Maybe even building a garage in a residential area with a shortage of parking spaces or a choice of closed parking spaces. Offering scarce goods really sounds like the first rule of business.
Cost-effectiveness and financial aspects
Investing in parking spaces is often considered safe in the world, because the demand for parking is growing in parallel with urbanization. Initial investments vary, depending on the location and scope of the project. While smaller residential projects may require minimal investment, commercial garages require higher costs for construction, automation and maintenance.
Income comes from hourly billing, daily and monthly subscriptions or even renting space for events.
However, regulation definitely means a lot in the parking industry, as in everything else. Investors simply like clear rules of the game.
