Amid soaring property prices, speculation in the market has moved from luxury homes to small flats. In fact, the trend is moving toward mini flats.
A recent survey shows that Hong Kong ranks number one worldwide in “unaffordable” housing, and not too many people in the territory will disagree. So as the cost of acquiring a home goes through the roof, it stands to reason that one way of making them affordable is to build smaller and smaller apartments.
A mini flat normally refers to a home of less than 200 square feet. Property developer Cheung Kong Holdings will roll out a batch of 25 such studio apartments at Mont Vert in Tai Po this weekend.
The cheapest in the batch sells for HK$1.69 million after all discounts are included. The price may seem attractive at first sight, but it works out to HK$10,929 per sq ft for a 165 sq ft apartment.
In fact, the developer has increased the selling price by over 25 percent since the project was launched last July. Still, buyers are expected to jostle each other for the latest Mont Vert flats.
Flat prices are rising so fast that prospective buyers, and speculators, will snap up whatever is available.
The concept of affordability has changed. For panic buyers, a home is considered affordable if the lump sum is within their financial means. Never mind how small it is.
In that sense, a flat under HK$2 million is a steal.
Last week, two sisters acquired a flat at Wah Ming Estate, a public housing project in Fanling, for HK$1.7 million.
The apartment is less than 147 sq ft, the smallest size for a public housing unit in Hong Kong. But at HK$11,564 per sq ft, the deal has set a new record for the public housing market.
The price is even higher than private flats being sold in the same district. A private unit in the area costs around HK$10,000 per sq ft at the moment.
These new owners are buying flats as an investment, a property agent told Apple Daily. Their plan is to charge a monthly rent of HK$6,700, which would give them a 4.6 percent return per annum, far better than keeping their money in the bank, which yields a meager 1 percent.
The current occupant pays a monthly rent of HK$4,700, and the tenancy will expire next month.
Is the frenzy going to continue? Some say yes, but perhaps at a slower pace as more property developers roll out mini flats to feast on the market boom.
More cash-rich buyers may target larger flats instead, hoping the per square foot cost difference will narrow.
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