Sun Hung Kai to subdivide Tuen Mun apartment block into smaller units to lure first-time buyers
‘The developers prefer to build smaller size units as they know that is what the market can afford,’ said Denis Ma, head of research at JLL
Sun Hung Kai Properties plans to boost the total number of flats at its project in Tuen Mun to 1,326 units by cutting the unit size area by 64 per cent, according to a government document.
Flats will be reduced to 468 square feet, from the original 1,287 square feet each, at the Avignon phase two development at So Kwun Wat, according to a document filed to the Town Planning Board (TPB) on Friday.
The original approved plan for the development was for 241 flats in 2013.
The latest plan, made up of seven blocks of 11 storey to 20 storey residential buildings with a total gross floor area of 620,000 square feet, is still subject to the approval of the planning board.
“The developers prefer to build smaller-size units as they know that is what the market can afford. In addition, the vacancy tax will also encourage builders to construct flats with higher marketability,” said Denis Ma, head of research at JLL.
Prior the government’s announcement of introducing a vacancy tax, he said developers would hold the large flats until they could achieve higher prices.
“But now, they cannot hoard completed empty flats for long. It will be better to build homes that can sell fast,” he said.
The vacancy tax was announced in June by Chief Executive Carrie Lam Cheng Yuet-ngor in a bid to increase the city’s housing supply. It would make completed homes left vacant for more than six months after receiving an occupation permit liable to a levy of about 5 per cent of the property value.
It was the second time SHKP increased the number of flats at Avignon phase two development. In 2014, the developer had submitted an application to the Town Planning Board to raise the total flats to 1,044 with each flat area reduced to 597 square feet.
“The tax will create a more notable trend of developers to build more smaller flats,” he said.
For the three years to 2020, JLL said 3,300 new micro flats with saleable floor areas of 200 square feet or less will be completed – up 35 per cent from the previous three-year period.
Nevertheless, the demand for such flats remains strong.
At The Unit, a serviced flat project in Happy Valley developed by Emperor Group, 64 of its 68 flats are micro units as small as 91 square feet. Despite their small size and eye-popping rents as high as HK$124 per square foot a month, nearly all flats at The Unit were leased within a few months, according to the report.