Garages: a favorite choice for real estate investments

We have been saying it for a long time: the real estate sector represents one of the most popular alternatives for those interested in making the most of their capital.

Homes, offices and commercial premises provide eye-catching profits. However, did you know that garages have become one of the most prominent assets in real estate investment? Recent studies reveal that they present fewer risks compared to other assets.

A period of transformation in the real estate market

María Matos – director of studies and spokesperson for the real estate portal Fotocasa – points out that parking lots offered a return of 7.2% at the end of 2022. A figure that surpassed housing, which offered a return of 6.5%.

“The macroeconomic context of high interest rates and consequent tightening of mortgage loans, directs the purchase demand towards parking spaces. An asset with high profitability, very safe and with a reduced initial investment without having to apply for a bank loan. It is usual that in a period of transformation suffered in the real estate market and facing times of uncertainty, the demand for these assets increases.”

For his part, Ferran Font – director of research at the online service pisos.com – states that “investing in parking spaces represents a lower economic barrier compared to buying a home, which makes this type of asset particularly attractive for those with more modest savings. In addition, the limitations imposed on the most polluting vehicles have intensified interest in parking spaces, especially in cities such as Madrid and Barcelona, where municipal regulations are particularly rigorous”.

However, both specialists advise a market analysis prior to any investment, familiarization with the area, available parking in the neighborhood and the existence of public parking facilities.

The evolution of garage prices

Although it is considered one of the most profitable options, the strong demand for parking spaces has led to a notable increase in their values in the last year. Levels not seen since before the coronavirus crisis have been reached.

In specific terms, the average cost has increased by 7.5% during the last fiscal year and by 12.5% compared to five years ago.

Where are the most significant increases observed (in double digits)?

• Palma de Mallorca (38.7%).
• Cáceres (32.8%).
• Las Palmas de Gran Canaria (22.7%).
• Leon (21.1%).
• Valladolid (18.6%).
• Seville (16.9%).
• Huelva (14%).
• Burgos (13.75%).
• Huesca (12.1%).
• Cordoba (10.1%).

In addition, prices have increased considerably in:

• Vitoria – Gasteiz (9.4%).
• Valencia (8.4%).
• Alicante (8.3%).
• Zamora (8.2%).
• Pamplona (8.1%).

Only in some cities such as Guadalajara (36.4%), Toledo (17.7%) and La Coruña (12.5%) did the amounts fall.

Reasons to invest in garages as real estate investments

Betting on garages as a real estate investment can be a shrewd strategy for a number of reasons. Some of them?

• Low initial investment: compared to the purchase of homes or commercial premises, buying a parking space requires a much lower economic outlay, which makes them accessible to investors with limited capital or as a first investment in the real estate sector.

• Reduced maintenance: garages require less maintenance and management overhead than other real estate assets. There is no need to worry about aspects such as painting, electrical installations or plumbing, which reduces operating costs and improves net profitability.

• Constant demand: there is a continuous demand for parking spaces, especially in densely populated urban areas or in cities with mobility restrictions for more polluting vehicles. This demand ensures stable occupancy and the possibility of adjusting rental prices in line with the market.

• Lower vacancy risk: compared to other properties, parking spaces tend to have a lower vacancy time, as the need for parking is constant.

Undoubtedly, the results we have just shared indicate that we are at a very good time to invest in this type of assets in the long term, and at KM2 Real Estate Services we are very proud to have been managing real estate assets since 1979.

Would you like to get more information? Do not hesitate to contact one of our agents or visit us at any of our real estate agencies in Barcelona and Madrid, we look forward to meeting you!