A parking space with real potential

Many urban dwellers are desperate for a place to put their prized motor - and canny investors are cashing in, says Chris Partridge

Rodger Dudding is well aware that lock-up garages are used for more than just parking cars. He owns 11,000 of them, and has seen it all. "One of my garages was raided and found to contain £30m worth of cocaine put there by a Colombian drugs ring," he says. "About four years ago, a bloke who had rented four garages was found to have knocked them all through and installed a printing press producing fake dollar bills. Very good quality too, I'm told."

Rodger Dudding is well aware that lock-up garages are used for more than just parking cars. He owns 11,000 of them, and has seen it all. "One of my garages was raided and found to contain £30m worth of cocaine put there by a Colombian drugs ring," he says. "About four years ago, a bloke who had rented four garages was found to have knocked them all through and installed a printing press producing fake dollar bills. Very good quality too, I'm told."

What could be worse? Well... suicides, sackfuls of unwanted puppies, and even the occasional murder victim. The traditional use of a lock-up as a sort of drive-in brothel by street ladies seems relatively benign, if sordid, by comparison. Dudding tries to prevent this, of course. "We ask for two forms of identification but the validation does not always work," he says.

The overwhelming majority are perfectly respectable car owners, of course, and they have made Dudding rich - his lugs (as he calls them) are worth about £75m in total. The secret is to regard it as a volume business. "I analysed the business and concluded that you needed to own at least 3,000 units for it to be viable," he explains. "Then you get economies of scale."

Dudding employs people to maintain them, collect the rent and look for new sites. Although rents supply the bread and butter income, development puts jam on it. "About 30 per cent of our sites are suitable for development. We periodically review them, perhaps buying a neighbouring garden to assemble a better site."

If Dudding is the Wal-Mart of garages, James Heagerty is the Harrods. He owns about 30 exclusive garages for the well-heeled residents of Chelsea, a legacy of his father's activities building flats for the Cadogan Estate in the Thirties.

For the garagista, this is the prime territory. Kensington and Chelsea issues more than 44,000 resident's parking permits each year but has only 28,000 designated bays. And there are some 200,000 drivers living in the borough. "If you have got an expensive car, you don't want to leave it outside," Heagerty says. His 30 garages let out at £6,000 a year, which adds up to a tidy sum, but a tenant still has to be found for each unit, the rent collected and the properties maintained. Isn't that a lot of trouble for the money? "I get a managing agent to administer it and only chip in when necessary."

Many lock-ups appear in auctions. "Garages are always popular lots, but it does take a more specialised buyer to unlock their potential," says Michael Linane of auctioneers Allsop & Co, who has two blocks of rather shabby lock-ups coming under the hammer next month.

Some blocks of garages are profitable in themselves, Linane says. "Garages very close to flats or houses can be offered to individual home owners for secure parking. These are income-driven garages. If you have 15 let on licence at £5 to £10 a month it can provide a nice income, while you keep half an eye open to development."

Linane will be auctioning a block of 14 garages in Southend, covering 0.16 of an acre. It has planning permission for a block of three flats with garages, and the guide prices is between £150,000 to £175,000. Also coming on the block will be three garages in South Norwood with planning permission for two semi-detached houses, which will fetch about £200,000. Another set of 17 garages in Sydenham includes seven let at between £400 to £600 a year.

Chris Coleman-Smith of auctioneers FPDSavills advises every buyer to look at the property before making a purchase. "We had a lot recently of eight garages in a row that one of our clients was interested in for development, but they open directly on to a track at the front so there is no room to build," he says.

Last week Coleman-Smith auctioned a block of nine brick-built garages next to a railway line in Lewisham that fetched a substantial £203,000 - nearly £23,000 per garage. Clearly, whatever gets stored in them, there is money in garages.

For more details on upcoming garage auctions, visit www.fpdsavills.co.uk/auctions; www.cushmanwakefieldeurope.com/auction/; www.allsop.co.uk; and www.a-r.co.uk/auctions/