Few buyers for Hong Kong nano flats as prices start to sag
December 12, 2018 - Tuen Mun
Speculative demand over Hong Kong’s shoebox flats appears to be over as quickly as it sprouted, following the decline in the city’s median home price.
Agents managed to sell only two of the 73 units on offer at the T-Plus project in Tuen Mun, each at around 130sq.ft (12 Sq. m), with a price tag starting at HK$2.85 million (US$364,600), prompting the developer to close the sales launch early.
Today’s sales result was “the worst in recent times,” said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.
Known variously as nano flats, capsule homes, shoebox flats or micro apartments, these tiny abodes typically are about the size of a standardHong Kong car parking space (134 sq ft).
Their prices, starting from HK$3 million, make them the only size within the affordability of many first-time buyers.
“The rise and popularity of nano flats is largely centered around their relative affordability for buyers with limited budgets,” said Denis Ma, head of research at Jones Lang LaSalle Inc.
“When housing prices start to sag, demand for these types of properties usually plummets as buyers turn their attention to larger units at the same price point.”
A slide in home prices is already underway in Hong Kong.
Property prices have declined 6.3% from their August peak, Centaline data show, while Midland Realty said last month that new-home sales in November were on track to be the lowest by volume since early 2016.
History suggests small apartments tend to suffer more when there are price adjustments: The cost for units measuring less than 40 square meters dropped 12% during the 2015-2016 price correction versus a 9% dip for those measuring 70 to 100 square meters, government data show.
At least 2,100 micro apartments are expected to be completed in Hong Kong between 2017 and 2020, or 510 units every year, five times the annual pace between 2014 and 2016, according to a forecast by JLL in March.
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