Hong Kong housing

HK$3million for a 170 sq flat just the beginning: Tiny flats even more expensive than Tung led to believe

Transaction prices can be higher in per square foot terms than some luxury homes

PUBLISHED : Wednesday, 11 November, 2015, 7:31am
UPDATED : Wednesday, 11 November, 2015, 8:38am

The head of the Our Hong Kong Foundation think tank, former special administrative region chief executive Tung Chee-hwa, might be shocked to learn that tiny flats can be even more expensive than he has been led to believe.

Property agents say developers who have spotted small flats as a lucrative and untapped market have been selling tiny flats – of less than 200 sq ft – since last year.

READ: HK$3m for a 170 sq ft flat? Ex-chief executive proposes release of more land to ease Hong Kong's 'shocking' housing crunch

Transaction prices, in per square foot terms, were comparable or even more expensive than some luxury homes, agents said, but demand was not bad because of the small lump sum payments required.

On Monday, Tung, who was Hong Kong’s first chief executive for eight years from the 1997 handover, expressed his concern over the housing problem in the city. He said he was shocked by high home prices after a woman told him she planned to buy a 170 sq ft home for more than HK$3 million for her family of three.

But tiny flats can cost a lot more. For example, Henderson Land Development is selling 198 sq ft units at its Eltanin Square Mile development in Mong Kok for HK$4.16 million, or HK$21,015 per square foot.

After a 10 per cent discount offered by the developer, the units cost HK$3.74 million, or nearly HK$19,000 per square foot, agents said.

The price is comparable to transactions price at Redhill Peninsula in Tai Tam in per saleable area terms. In September, a unit at Block 6 Redhill Peninsula was sold in the secondary market for HK$19.59 million or HK$19,265 per square foot, according to Centaline Property data.

Kowloon Development launched its 1,008-unit Upper East development in Hung Hom for pre-sale in August. Forty per cent of its units are of about 200 sq ft in size. But the living space falls to 114 sq ft after deducting hallway, pantry counter, balcony and toilet. The units cost about HK$3 million and in just two months, it sold nearly 90 per cent of them – 900 units.

In the secondary market, a 200 sq ft unit in the Glory Rise development in North Point was sold for HK$3.98 million in August – HK$19,900 per square foot.

Derek Chan, head of research at Ricacorp Properties, warned the prices of tiny units could fall faster than normal-sized units in a falling market.

“When there are plenty of choices, buyers may choose bigger space in a falling market,” Chan said.

Property analysts have predicted the city’s home prices will fall as home production increases and interest rates rise.

On Tuesday, Kowloon Development announced the price list for 50 flats of between 214 sq ft and 478 sq ft at its South Coast development in Tin Wan, Aberdeen. A 214 sq ft unit on the 17th floor costs HK$4.23 million or HK$19,644 per square foot. After a 10 per cent discount, the selling price is HK$17,680 per square foot. A 254 sq ft unit on the 17th floor is being sold for HK$5.58 million or HK$21,980 per square foot – or HK$19,782 per sq ft after a 10 per cent discount. The sizes of the two units include balconies of 22 sq ft.

In the secondary market, there were 23 transactions for units smaller than 200 sq ft in September. The average value was HK$2.18 million. That fell to HK$2.05 million last month, on 22 transactions.