Monday, 15 May 2017

Rise of 'nano' flats in Hong Kong

Flats getting smaller as home prices soar, but people have better shot at buying own home
By Joyce Lim, Hong Kong Correspondent, The Sunday Times, 14 May 2017

As property prices spiral upwards in Hong Kong, the race is on to build smaller and smaller homes.

Dubbed "nano" flats by the Hong Kong media, these homes are less than 200 sq ft, cost about HK$4 million (S$725,000) on average, and are popular with young couples.

In comparison, a so-called shoebox apartment in Singapore is usually about 400 sq ft and costs around $500,000.

Last year, 206 nano flats were completed in Hong Kong, up from 81 in 2013, reported the South China Morning Post, citing government figures.

Such flats made up a tiny 1.4 per cent of the 15,595 new homes built in Hong Kong last year. This year, about 5,900 small homes - less than 430 sq ft in size - are expected to be built, making up 41 per cent of all new flats, property consultancy JLL said.

These small flats have made it possible for young couples to own homes in a central area, such as Wan Chai on Hong Kong Island.

However, analysts warned that an oversupply of such flats is likely to disrupt the market in the long run.

"In the future, when these buyers try to trade up, they will not be able to sell them because of market changes. People may have more money and want bigger flats, so nano flats may not be suitable," said Mr David Ji, director and head of research and consultancy (Greater China) at Knight Frank.

Hong Kong has pipped London as the top market for luxury homes, setting records with four deals hitting the US$100 million (S$140 million) mark last year. However, there appears to be no limit to how small a flat can get.

According to Hong Kong Building Department records, the smallest flat in Hong Kong is a 61.4 sq ft flat. The flat comes with no bathroom or kitchen space.

That would make it smaller than a carpark space in Singapore, which has to be at least 124 sq ft, according to Land Transport Authority rules.

Currently, there is no rule on the minimum size of a residential unit in Hong Kong, said Ms Cathie Chung, JLL's national director for research.

Professor Edward Yiu, an urban studies expert and member of the Hong Kong Legislative Council, said that while nano flats affect living standards, imposing rules on flat sizes will mean many people will be unable to own a flat.

The downsizing of flats comes amid a continued rise in property prices in the city, which has made it increasingly difficult for young people to own a home.

Hong Kong's home price index, which tracks prices in the secondary market, rose for the 12th straight month in March, to a record 319.8.

The city was ranked the most expensive housing market in the world for the seventh straight year last year, according to the annual Demographia International Housing Affordability Survey.

Frustration over home prices was among the reasons thousands of young people joined the 2014 student-led Occupy movement, which pushed for universal suffrage in electing the city's leader.

Incoming Hong Kong chief executive Carrie Lam, who takes office in July, has made helping more Hong Kongers own a home one of her key priorities.

Ms Yau Wai Ching, 26, a Hong Kong lawmaker who was later disqualified for making a mess of her swearing-in oath, last year made headlines when she said young people in Hong Kong have no room to "bok yeh" due to low wages and sky-high property prices.

Bok yeh in Cantonese slang means to have sex.

Single working professionals like bank executive Josephine Law, 29, welcomed the option of nano flats.

If not for these tiny homes, Ms Law, who earns a monthly salary of HK$30,000, said she would have to work for more than 20 years to buy a flat, given rising property prices.

But will nano flats help resolve Hong Kong's housing crunch?

Prof Yiu said such flats are "not a solution but a response to the market". Property prices have risen much faster than salaries, leaving many middle-income households with the option of buying only a 200 sq ft apartment, he said.

"If prices keep going up, flats will get smaller and smaller," said Prof Yiu.

Singapore couple learn to live in a small space in Hong Kong
By Joyce Lim, Hong Kong Correspondent, The Sunday Times, 14 May 2017

HONG KONG - Before moving to Hong Kong, Singaporean couple Lim Wei Wen and Tan Yan Han had heard all about the high property prices in the city and how families are often crammed into small flats.

But, it was only when they moved into one such flat last year that they realised how bad it can get.

For the past eight months, a 150 sq ft flat - one of three subdivided units - in Wan Chai has been home for Mr Lim and his wife, who pay a monthly rent of HK$6,300 (S$1,140).

Mr Lim, 25, who works in the financial sector, had wanted to live and work in the city. His main concern was to live affordably in the heart of the city and he did not mind the size of the flat.

The unit is about the size of his bedroom in the condominium in Singapore where he used to live with his parents. But, unlike in his parents' home, where they could hang out in the living room for instance, the couple have found themselves having to spend most of their time on a super-single-sized bed in their Hong Kong flat.

The bed, which is as wide as two pillows laid side by side, is the largest piece of furniture in the flat. In front of the bed, without a partition, is a kitchen with a small sink and an induction stove.

Given the tiny kitchen, Ms Tan, 25, who works for a food publication, cannot help knocking over plates and bowls sometimes when she whips up dishes such as curry chicken, bak kut teh and laksa.

Without any space for a sofa or chairs, the couple have to eat their meals on their bed.

They keep most of their belongings in a storage compartment under the bed. Lift up the mattress and the bed frame serves as an ironing board, said Mr Lim with a chuckle. "We have learnt to be more innovative after moving to Hong Kong."

The bed frame also serves as a "dining table" whenever he has guests over for dinner, he said. The couple once shared a meal on their bed with three family members who visited them. Said Ms Tan: "My mum said, 'Are you crazy? (Are) you sure you want to stay in this room?'"

But, it is Mr Lim's dream to work overseas and such hardship is nothing compared with the exposure and invaluable experience that he will gain from the stint, he said.

Ms Tan added: "I have no regrets. This place really brings us closer to each other."

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