Sun Hung Kai Properties at forefront of push for tiny Hong Kong homes

Sun Hung Kai Properties (SHKP) is likely to become the city's biggest supplier of small flats once its application to convert four luxury residential projects in the northeast New Territories into 4,000 tiny apartments wins approval, according to industry observers.

Analysts expect more developers to follow with small-flat strategies as strong demand for tiny apartments drives home prices in Hong Kong to a new high, with the Rating and Valuation Department's monthly price index for private homes climbing to a record 255.6 in July.

"With luxury homes subject to heavier taxes, developers seeking fast cash returns have to shift to the mass market now," said Vincent Cheung Kiu-cho, national director of Greater China at Cushman & Wakefield.

Government policy to release more land designated for small flats to meet the target of supplying 20,000 private units per year would also encourage developers, he said. "The increase in housing supply is another catalyst to build more small flats."

Over the past six months, SHKP has applied to the Town Planning Board to change the design on four of its luxury residential projects into mass housing. It wants to reduce unit sizes from the original 2,000 sqft each to small flats, including studio units as small as 200 sqft. The four projects are in Sheung Shui, Tai Wai, Tuen Mun and Yuen Long.

The developer wants to convert its low-density project in Kwu Tung, Sheung Shui, from the original 90 villas into 1,147 two and three-bedroom units. In Tai Wai, it applied to increase the number of units at the proposed project at Heung Fan Liu from 816 to 1,326.

The company also wants to convert the 241-unit Avignon phase two development in Tuen Mun into a project comprising 1,044 flats while planning to replace 65 villas in Au Tau, Yuen Long, with seven blocks with a total of 455 units.