Hong Kong-based private equity firm LimeTree Capital said on Tuesday it has bought an 80 percent stake in the largest car-park manager in the Chinese mainland for $42 million, a sector the company says is undervalued.
Sunsea Parking Management oversees 100,000 parking bays for companies including the mainland's largest commercial property developer, Wanda Group, food giant COFCO and Sino Ocean Land. Its purchase will add to LimeTree's portfolio of 5,800 bays across five cities in the mainland.
"In a [market] where real estate is a dominant investment class, car parks are notably undervalued and overlooked," LimeTree managing partner James Goulding said in a statement.
"In 2013, we identified car parks as an excellent proxy for the growth of affluence in [the mainland] and as an asset class with significant potential for income and valuation upside from modernizing, professionalizing and technology and green innovation."
In 2014, LimeTree closed its first $340 million China Car Parking Investment Fund, which reportedly aims to addressing the lack of parking spaces in the mainland.
Property consultancy firm Knight Frank's senior director Thomas Lam said that in the long run there could be significant demand for car parks in the mainland due to urbanization and a shortage of space in big cities.
But growth potential in the near term might be capped due in part due to unattractive investment yields on the back of government regulations on parking fees, he said.
The National Development and Reform Commission estimated in September that 50 million new parking bays would need to be built for a total investment of about 3 trillion yuan ($470.66 billion) to meet a shortage, LimeTree Capital said.
