This report outlines the potential attractiveness of car parks to real estate investors, looking at the Netherlands. It describes how investors can arrive at an initial selection of potentially attractive locations for investment by applying an analytical framework combining destination attractiveness with mobility patterns.

Car parks can help optimise a broader real estate portfolio: they offer investors stable, long-term cash flows, because operators tend to enter into long-term lease contracts featuring rent adjustment for inflation. And in spite of the low-risk profile of car parks, they have – in the Netherlands – outperformed all other categories of real estate over the past decade or so, yielding more than decent returns even during the country’s protracted economic crisis of the past five years.

Moreover, the fundamental outlook for car parks as a real estate category continues to look good in the multifunctional and dynamic inner-city locations of selected Dutch cities. These are not just the country’s four largest cities of Amsterdam, Rotterdam, The Hague and Utrecht, but also an array of urban centres elsewhere in the country. All these innercities serve as shopping and “experience”/leisure magnets to local residents and nearby out-of-towners alike. The traffic they attract ensures that new tenants are quickly found if retail premises fall vacant, thus cushioning the area against the effects of online retailing and macro economic headwind.

Using data on the Netherlands, the report reviews the different variables that go into Bouwfonds IM’s top-down analysis of potentially attractive locations for car park investment:
• The growth outlook for the total number of passenger cars in the country, driven by growth in the number of households and workforce growth
• Regional and demographic differences in car ownership, and the effect on traffic volumes into inner-cities
• The preferred modes of transport for making shopping trips into urban centres from across their surrounding “catchment areas” well outside city limits
• The outlook for parking space in inner-city “hot spots”, also looking at trends in local authority policy-making.

Bouwfonds IM’s theoretical framework sheds light on why and how far people will travel, and, consequently, to what extent they are likely to use car parks. Based on the analysis, a “parking pressure” indicator for potential car park attractiveness was calculated. The higher a city’s score for “parking pressure”, the greater its potential attractiveness for investment in car parks.

Bouwfonds IM stresses, however, that a top-down review of possible opportunities – as presented in this report – is only a first step: local opportunities identified with the aid of the “parking pressure” framework will always have to be followed up by bottom-up, location-specific analysis. However, the results of this top-down analysis are not fixed since there are also investment opportunities based on very good results from a bottom-up analysis.

The report concludes by presenting a ranking of Dutch cities by “parking pressure”. The Dutch capital, Amsterdam, predictably takes first place and would thus appear to be the country’s best location for investing in car parks – judging by this preliminary top-down opportunity scan at least. Investors may be surprised, however, to discover that none of the country’s other largest cities feature in the top 3 and that one of them does not even make it into the top 10.

The “parking pressure” framework thus provides for a fact-based, sober top-down assessment of where investors might start to look for potentially attractive car park investment opportunities. It provides a tool for broadening the opportunity scope for investment beyond a country’s “usual suspects”, but one must not forget the bottom-up analysis which might reveal other opportunities.