Sun Hung Kai Properties at forefront of push for tiny Hong Kong homes
Other players may follow the shift in strategy if the developer wins nod to convert four luxury projects in New Territories into 4,000 tiny 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.
"The marketability of small units is certainly better than that of luxury houses," said SHKP deputy managing director Victor Lui Ting, adding that the strategy was also in line with the government's housing policy of increasing supply. "Other developers will also have similar thoughts of building more small flats."
By the weekend, SHKP has sold close to 400 units, including small ones of about 350 sqft each, at The Wings IIIA in Tseung Kwan O at about HK$13,300 per square foot.
Last week, the tiny flats at Mont Vert, developed by Cheung Kong (Holdings), in Tai Po, including one as small as 177 sqft, were sold for between HK$1.77 million and HK$2.15 million.
Sino Land associate director Victor Tin Sio-un said small units would be considered in its new Kwun Tong redevelopment project but the final design was subject to market demand.
On September 1, Sino Land and Chinese Estates Holdings won the contract for the Urban Renewal Authority's single biggest project in Kwun Tong's rundown town centre.
"Small units are preferable for projects in urban areas that have strong demand from younger end-users. Flats worth HK$5 million to HK$6 million receive strong support because of banks' lending policy," Tin said.
Separately, Hang Lung Properties sold all 52 units at The HarbourSide in Kowloon Station.