Tiny flats spring up in Shenzhen amid soaring home prices
Property developers in Shenzhen are copying Hong Kong companies in building ever smaller apartments, even as prices soar, in order to lower the overall prices of real estate for first-time buyers.
The Masterpiece, a new project developed by a major Shenzhen developer Logan Property, in the city’s northeastern district, features 2,393 apartment units measuring between 35 square meters (376 square feet) to 62 square meters.
It’s the smallest apartment ever designed by Logan and is scheduled to begin sales in October.
“The demand by young people for housing is huge, as the average age in Shenzhen is less than 30 years,” said Zhang Song, design director of Logan Property.
The smallest of the units features a duplex, with two bedrooms and two living areas spread over 35 square meters.
The tiny apartments are likely to be extremely popular, even as the average price is still estimated to surpass 40,000 yuan per square meter, Zhang said.
“The total price is still below 1.5 million yuan, that would be very rare in the market,” he said, adding that the apartment location is attractive as it is only 200 meters to a subway station.
Shenzhen, the southern Chinese city neighbouring Hong Kong, has become the most expensive city for new homes on the mainland in the past year, with prices surging more than 40 per cent.
Average home prices rose to 55,001 yuan per square meter in September, which means a typical 90 square meter flat will cost about 5 million yuan, according to research house China Index Academy.
Last week, several apartments in the city’s Nanshan district made nationwide headlines when they were offered for sale at 880,000 yuan for a space of 6 square meters each. Four out of 11 units offered were sold out within a day.
Shenzhen’s government stepped in the day after, and rescinded the transactions, saying that the properties had breached existing laws and regulations.
Data from property portal Focus.cn shows there are nearly 100 new projects on sale in the city and its outskirts providing units smaller than 50 square meters.
Lai Zhuobin, chief financial officer of Logan, said the market is tending to build smaller apartments for first-time purchasers like what Hong Kong has been doing, amid limited supply.
“They can’t be too small, should still meet the basic comfort needs,” he said.
Surging home prices is not just a burden for buyers, but also for developers, as it fuels the frenzy in the market for undeveloped land parcels, Lai said.
“Prices are rising too fast and pushing up land costs,” he said.
The mid-sized developer has been expanding aggressively in Shenzhen, paying top dollars for prime land since 2014. In June, it won a land bid in Guangming New District for 14 billion yuan (US$2.1 billion), a record price for the city.
Land was bought at average prices, and located close to public transportation, Lai said. Five out of seven current projects in Shenzhen are located on top of subway stations, he said. Logan may also expand its projects to nearby cities like Huizhou and Dongguan, following the Shenzhen government’s plan to develop the surrounding areas.