Tuesday, November 26, 2013

Hong Kong has parking minimums AND very expensive parking. How can that be?

Tuesday, November 26, 2013

I recently stumbled across some information that resolved a Hong Kong parking mystery. Hooray!

Err. You didn't know there was a mystery about Hong Kong parking? I had better explain.

Singapore and Hong Kong both have big reputations for restraining car ownership and car use.

But there is a puzzle.

Singapore's explicit travel demand management (TDM) efforts are much more severe than Hong Kong's, yet they are apparently less effective.

Hong Kong's car ownership (about 60 cars per 1000 people) is much lower than Singapore's (about 110 cars per 1000) and its public transport mode share much higher. Singapore has around 3 times more private car kilometres of travel per person than Hong Kong. (Thanks Jeff Kenworthy - pdf)

Hong Kong's expensive parking is probably part of the answer to this puzzle.

But why does Hong Kong has such expensive parking?

At those densities, of course parking is expensive, you say? High land prices mean expensive parking, right?

Not so fast. High urban densities DON'T always result in high parking prices.

Just look at Mumbai or Cairo. These cities remind us that parking prices can be low even in dense cities with expensive real-estate.

By contrast, there is no doubt that Hong Kong has expensive parking.

It is not just daytime CBD parking that is expensive. Home-based residential parking is usually also very expensive. Part of that may be property speculation. But even so-called bubble-priced parking is still delivering a yield of about 4 percent so speculation is not the whole story.

Even residential parking in the public housing estates is expensive. For example when I looked in 2009, parking for tenants at Lek Yuen Estate in Sha Tin was HK$1,350 (or more than US$170) per month.

OK.  So maybe Hong Kong restricts parking supply as part of its transit-oriented urban transport strategy? 

Um. No again. Hong Kong actually has surprisingly conventional parking policy. 

That is what we found, to our surprise, in the ADB study that led to 'Parking Policy in Asian Cities'. Hong Kong has conventional minimum parking requirements (and no parking maximums).

The minimums are much lower than in the USA but they are higher than those of Japanese cities or Beijing.

Hong Kong parking requirements are actually similar to Singapore's. But mysteriously, Hong Kong parking is much more expensive than Singapore's.

So we do have a mystery here. 

Why are parking prices so high if Hong Kong parking policy now tries to meet "demand"?

Doesn't the conventional approach to parking, with its minimum parking requirements, always pump too much parking into a city?

Based on Hong Kong, the answer seems to be, no, not necessarily. But why not?

I already had a plausible guess before the recent discovery mentioned above. If we assume parking minimums were absent from Hong Kong before a certain date, then market prices for parking could have risen as car ownership rose without parking construction keeping pace.

This was a hyper-dense city after all with rapidly improving mass transit, so developers might happily build with very little parking, I guessed.

Then at some point, we know that Hong Kong did embark on a conventional approach to parking policy. It would have done so with a context of high parking prices and limited parking supply.

Now consider how Hong Kong would have set the new parking minimums. 

They required estimates of parking demand.

But parking demand in Hong Kong was very low when parking minimums were first imposed. This low demand was shaped by pre-existing high parking prices in highly transit-oriented landscapes, not to mention low car ownership.

It seems that the parking minimums were set rather low, based on that low demand. Even for new areas. The prevailing prices seem to have been taken as a given. So the new parking mandates did not exert (much) downward pressure on prices. (There is a longer story here, for another day.)

In addition, don't forget that parking requirements only apply to new development and redevelopment. So, even with Hong Kong's rapidly changing skyline there are still many 1970s buildings around and any injection of new parking supply is gradual.

And Hong Kong uses some flexibility in applying its parking mandates. There are significant reductions in the most transit-oriented locations. Parking supply can be restricted if the traffic impacts would be excessive. Small-scale street-side retail is usually exempt.

So Hong Kong's shift to a more-or-less conventional parking policy didn't cause low parking prices nor excessive supply (as far as I can tell).

But what parking policies came before the current conventional one? 

Without knowing that, I wasn't as certain of the narrative above as I would have liked.

I had assumed that before parking standards were introduced perhaps there had been a laissez faire approach to parking.

This is where the new information mentioned at the beginning of the article comes in.

Hong Kong actually aggressively restricted residential parking supply in the 1970s. It seems to have had strict maximums (at least for residential development) before it had minimums. 

Parking was a key tool, perhaps THE key tool of that period, aimed at restricting car ownership growth.

I hadn't realized this until I stumbled across this insight (under point 2.5) on a site outlining a 1997 complaint about private residential parking from the Hong Kong Consumer Council.
For traffic control purposes, the declared policy of the Government has been to restrain private car ownership. Prior to 1981, the Government attained this by restricting the provision of residential parking spaces. The Government later adopted fiscal measures to restrict the growth in private car ownership.
And, to confirm, here is the relevant Statement of Intent from the Hong Kong Planning Standards and Guidelines 1992 edition issued by the Planning Department, explaining the switch to a conventional parking policy and the shift away from restricting parking supply:
Parking standards for residential development were formulated in the light of the introduction of fiscal measures to restrict directly the rate of growth in private vehicle ownership and the abandonment of restraint on car ownership by a restriction of residential parking spaces. The overall intention of the standards is to ensure that, except in special cases, future residential developments should have sufficient parking provision to match the current and anticipated car ownership of residents. Generally, therefore, minimum rather than maximum standards are set. This should enable developers to be aware from outset of the extent of parking provision they can plan.  [My emphasis]
So parking supply was deliberately restricted with housing built in 1970s especially and up until 1981. 

And the impact of this would have been large, since there must have been a huge amount of residential construction in the 1970s.

Hong Kong's population rose from 3,995,400 in 1970 to 5,109,812 in 1981. And the 1970s was (mostly) a time of rapid economic growth in Hong Kong. So a large increment of Hong Kong housing took place with very low rates of parking.

I don't have the full story but I suspect that this policy began in the early 1970s. But even before that I imagine that most high-rise housing in Hong Kong was built with little or no parking, since car ownership was tiny in that era.

Why does all this matter? I can think of several reasons. Can you? 

But for now just let me summarize how the points in this post have helped clear up the puzzle about Singapore versus Hong Kong.

As mentioned at the top of this post, it is surprising that although Singapore's car restrictions are more severe than Hong Kong's, car ownership and use in Singapore are much higher.

Part of the answer is Hong Kong's extreme urban density (about 3 times Singapore's) which helps enable excellent public transport service levels.

But Hong Kong's expensive parking must also be important. And I had assumed expensive parking was a result of conscious and current policy in Hong Kong.

But that assumption was shaken by finding that Hong Kong's parking policies today are conventional with parking minimums, and little different from Singapore's. Contemporary parking policy in Hong Kong couldn't explain its high parking prices.

How perplexing.

But now I think I understand how Hong Kong can have parking minimums AND very expensive parking.  Any objections? 



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