‘Nano’ flats on the rise as Hong Kong homes shrink amid high property prices
Apartments smaller than 200 sq ft increasingly popular in urban districts like Wan Chai, Central and Western and Sham Shui Po
Hongkongers are feeling the squeeze as new “nano” flats measuring less than 200 sq ft are mushrooming around urban districts such as Wan Chai, Central and Western and Sham Shui Po, according to official figures.
The government has also forecast that nearly half of all flats completed next year will be smaller than 400 sq ft in size.
Developers are building smaller homes while prices continue to soar. Four housing price indices by Centaline Properties hit historic highs this month.
Developers completed 206 nano flats in 2016 out of a total of 15,595 homes across the city. That accounts for 1.4 per cent of new units, up from just 81 in 2013.
The tiny flats are more popular in some districts than others – 10.8 per cent of all homes completed in Wan Chai last year were nano flats, the highest proportion in any district.
Ryan Shum, Centaline’s marketing manager for Wan Chai, said nano flats were not a new phenomenon in the district. Some flats completed in the 1980s were also less than 200 sq ft in size, he said.
“Wan Chai attracts a lot of young and single executives working in Central and Admiralty who want to live close to their offices,” Shum said.
“Some expatriates are attracted too, as they consider the small flats are just like a hotel room. The rental yield can be quite good. It can be 3.5 to 3.7 per cent per year.”
Buggle Lau Kar-fai, chief analyst of Midland Realty, said: “With property prices staying high, buying a small flat with a smaller lump sum is the only way some people can afford to buy property.
“Another issue is the mortgage. Nano flats often cost less, so buyers without strong financial resources may be able to finance their purchase.”
But Lau warned of risks for buyers of nano flats. “People won’t stay in nano homes forever. Even owner-occupiers will want to move to a bigger flat one day. If the market goes downward, then bigger flats will become more affordable. Owners of nano flats may find the demand for such flats can decline.”
Last week, Secretary for Development Eric Ma Siu-cheung released documents predicting that nearly half of all new flats finished next year would measure less than 400 sq ft each.
Ma was responding to lawmakers’ concerns about shrinking homes.
Ma said the government had no plans to step in to reverse the trend, but if circumstances warranted, it might “consider imposing suitable requirements through sale conditions when individual residential sites are put up for sale”.
The proportion of small flats, or Class A flats of less than 400 sq ft, is surging.
In 2012, 14.9 per cent of completed units were Class A flats. This surged to 25.9 per cent last year and is expected to rise to 43.4 per cent in 2018. That means 8,468 out of 19,526 new flats will be small homes.