Can Driverless Cars Actually Affect CapitaLand Limited?

In a previous article of mine, I shared that many companies – such as Grab, Toyota and Alphabet – are in a race to provide driverless vehicles to the world over the next few years. nuTonomy, a company that’s holding a driverless taxi trial in Singapore right now, wants to introduce a fleet of 100 driverless taxis here by 2018.

In my aforementioned article, I also mentioned that driverless vehicles could help taxi companies solve manpower issues. There are more issues driverless vehicles can help address – that of land scarcity in cities.

Cars that can’t drive themselves have to be parked at wherever their drivers want to go. In Singapore, which is land scarce, it can be an issue – most buildings require car park space, and there are opportunity costs associated with such space.

Driverless cars can abolish the need for car parks in many buildings as the vehicles can drive themselves to designated parking areas.

Moreover, driverless cars can conceivably reduce private car ownership, resulting in less cars on the road and also lesser parking space needed. Some studies have found that cars today spend up to 95% of the time being parked – that 95% of parked time can be more efficiently utilised if cars can drive themselves around.

The possibility of reduced requirement for car parks could mean more land for real estate developers to work on. There are many companies in Singapore’s stock market that have exposure to the property market here and some include Keppel Corporation Limited (SGX: BN4) and CapitaLand Limited (SGX: C31).

The number of registered cars in Singapore at the end of 2015 was a five-year low, according to the Land Transport Authority. But, the number of rental cars and buses had all reached record highs. This suggests that Singaporeans are warming up to a car-lite society.

There are no guarantees that Singapore’s vehicle population in the future will predominantly be made up of driverless vehicles. But, it’s an interesting development to keep an eye on, not just for transport-related companies in Singapore, but also for real estate companies.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.