Hong Kong "mini" flats boom as govt fails to rein in record-high prices

Emperor International Holdings

18/01/2017 06:53

By Venus Wu 
    HONG KONG, Jan 18 (Reuters) - For part-time furniture mover 
Kong Ngai-lam, 26, home is the bottom half of a bunk bed inside 
a tiny room that fits little else. Nearly 200,000 Hong Kong 
residents like him call a wire cage or bed in partitioned 
apartments their home. 
    Making housing more affordable was among outgoing Hong Kong 
leader Leung Chun-ying's top priorities when he took office in 
2012, but his administration has been unable to rein in 
skyrocketing prices that have added to discontent in the city. 
    "Over the past four years, despite a number of measures by 
the current-term government which has successfully curbed 
external, investment and speculative demands, the difficulty in 
achieving home ownership remains an unresolved problem," Leung 
said in his swansong policy address on Wednesday.  urn:newsml:reuters.com:*:nL4N1F81WK 
    High property prices and rents posed "the gravest potential 
hazard to the Hong Kong community as many families have no 
choice but to live in subdivided units, even in industrial 
buildings," Leung added. 
    Property prices have surged nearly 50 percent to historic 
highs since he took office, according to government data, and 
tiny living spaces have become increasingly common. 
    About 100,000 people under the age of 35, including 
children, make up half of those occupying such partitioned 
units, a government report showed. Non-government organisations 
say the real numbers are higher. 
    These units, measuring half the size of a standard carpark 
space at an average of 62.4 square feet (5.8 square meters), are 
getting more expensive too. 
    Median rents surged 10.5 percent to HK$4,200 ($520) in 2015, 
official data showed. The figure is greater than the 8.4 percent 
rent increase in private homes over the same period. 
    Kong now pays $250 monthly rent for his bed space in the 
cluttered apartment shared with 10 others. A handwritten note 
warns of eviction if rental payment is late: "We are not the 
Salvation Army," it says. 
    There are no legal guidelines in Hong Kong restricting how 
small apartments can be, nor any on rent control. 
    "The biggest issue in Hong Kong is we don't have any legal 
restrictions, so the landlords can do whatever they want," said 
Kong's social worker and community organiser at the Society for 
Community Organization, Sze Lai-shan. 
     
    MOSQUITO-SIZED FLATS 
    "Mini flats" or "mosquito flats" are a growing trend as 
developers target first-time buyers who have given up hope of 
ever owning a decent-sized home. 
    Emperor International Holdings  0163.HK  will build flats as 
small as 61.4 square feet (5.7 square metres), though the 
measurements exclude kitchen and bathroom; Chun Wo Development 
Holdings has plans for a residential building catering to young 
first-time buyers with 128 square feet (11.9 square metres) 
units. 
    "Hong Kong's real estate has gone so expensive, that's why 
(developers) are making flats smaller and smaller to make them 
affordable," said Edina Wong, senior director of residential 
services at property consultancy Savills. 
    Hong Kong's richest man Li Ka-shing recently said the trend 
made him feel "uneasy", even though a residential complex built 
by his Cheung Kong Property Holdings  1113.HK  offers flats 
smaller than 200 square feet (18.6 square meters). One unit in 
September sold for HK$2.8 million ($360,000). 
    Thomas Lam, senior director at Knight Frank, expects small 
flats to remain popular in the short run as long as prices 
remain high and tightening measures such as higher stamp duties 
stay in place.  
    But a mini apartment is not for everyone. 
    Freya Tseng, 27, who advises her family on property 
investments, has stayed away from mini flats. 
    "If you buy it for yourself, the quality of life will be too 
low and you won't be happy living there. If you buy it for 
investment purposes, it doesn't have any reserve value," Tseng 
said. "It's a joke." 
 
 (Editing by James Pomfret and Jacqueline Wong) 
 ((james.pomfret@thomsonreuters.com; +852-28436390; Reuters 
Messaging: james.pomfret.thomsonreuters.com@reuters.net)) 
 
Keywords: HONGKONG PROPERTY/