Children seeking to live away from parents fuel rise of the tiny flat
The desire among young adults to live away from their parents is fuelling the demand for tiny flats in Hong Kong’s city centre, says property tycoon Keith Kerr.
Now running a start-up property firm, the former chairman and chief executive of Swire Properties said this group of well-off urban workers will drive the sales of his first project.
“There are many families that have children who would like to live separately,” Kerr said. “That has always been on our mind as a potential demographic: young people perhaps with the help of mum and dad who have deposits.”
Kerr founded The Development Studio in 2009 after 35 years at Swire Properties, and has since been taking up small land slots in some of the most sought-after areas in Hong Kong.
The studio’s first residential building, 28 Aberdeen St, in the Sheung Wan district, was launched last month. It consists of one-bedroom flats of about 410 square feet, with prices averaging HK$34,000 (US$4,375) to HK$40,676 per square foot after discounts.
The first 10 flats offered for sale sold for HK$13.2 million to HK$14.7 million each on March 31, although the most expensive flat on the 20th floor was not sold. Two deals involved buyers taking two flats for more than HK$24 million.
The project set a benchmark for TDS’s future developments, which will appeal to young workers who want a cosy, quiet home in an urban neighbourhood, Kerr said.
Declines in the size of the average household in Hong Kong and soaring home prices have pushed up demand for tiny flats.
The average number of people in one household has dropped from 4.5 in 1971 to 2.8 as of 2017, government data shows.
The trend has seen local developers offering studios and one-bedroom flats to cater for small families and investors eyeing rental income.
In September, Henderson Land unveiled its One Prestige project in North Point on Hong Kong Island. One Prestige’s smallest flat is priced at HK$3.9 million after discount for 163 sq ft.
Hong Kong may see as many as 5,000 new small flats every year until 2019, almost three times the average in the last decade, real estate consultancy JLL projected in its Hong Kong residential sales report.
As a “boutique” developer, TDS faces challenges in acquiring land and covering the high construction costs, Kerr said. Due to its limited land reserve, the firm will focus on improving the design and space efficiency to attract single workers and young couples, he added.
“We have kind of set ourselves up to do some of the small-site developments, which don’t really move the needle for the big players,” he said.
“We are not appealing to a huge demographic, but there are enough people in the market who appreciate what we are doing.”
TDS is also looking to build a contemporary house in the upmarket Kowloon Tong area, on a piece of land Kerr bought for HK$228 million in 2015.
The firm also owns two slots in Central and Wan Chai that are in the early stages of development, according to Kerr.
In C-Suite, Kerr shares his views on the difference between working at the large developer and running his own small property company