Soaring prices force home buyers to think small in China
Mainland builders spot demand for tiny flats, fuelled by scarce land, lower borrowing costs
Tiny is the new big for Chinese buyers who are snapping up smaller, more affordable apartments as property prices in big, busy cities rise, fuelled by scarce land and a surge in demand because of lower borrowing costs.
The studio flats commonplace in New York, Paris or London - as well as in space-starved Asian cities such as Hong Kong, Singapore and Tokyo - remain a novelty in mainland China, where larger units are still the most sought-after.
But as real estate prices continue to rise in more developed cities, demand for units smaller than 50 square metres is also rising, enticing China Vanke and Evergrande Real Estate Group - China's two biggest developers by sales - to develop some mini-flats, a sector that has so far been the domain of provincial firms.
On Saturday, Vanke launched sales of its 13 sq metre flat, which property agents say is China's smallest.
"These apartments are a solution to the high-price housing problem," said Alan Cheng, a general manager for realtor Centaline in Shenzhen. "You don't have enough cash, so you have to buy a smaller living space."
Last month, official data showed home prices in Beijing, Shanghai, Guangzhou and Shenzhen rose between 1.1 and 6.6 per cent from April after the central bank cut interest rates for the third time since November last year to revive a property sector key to the growth of the world's second-largest economy.
Vanke, which launched the 13 sq metre flat in Guangdong, said it was targeting recent graduates and young professionals who would be shut out of the housing market otherwise.
"MiCool satisfies the housing needs of city youngsters and entrepreneurial youngsters," the company said of its 5,000-unit project, which includes flats as big as 38 sq metres.
Almost all the first batch of 2,000 flats released in the project had received initial deposits, Vanke added. The 13 sq metre flats, which the company displayed on a truck bed, even have a balcony and cost 260,000 yuan (HK$329,000), or about 20 per cent of the city's 1.5 million yuan average home price.
Guangzhou has seen the built-up area of small flats surge fourfold in the first five months of the year to 275,785 sq metres from the same year-ago period, data from property researcher CRIC showed.