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News Special


First-time Hong Kong Home Buyers Snap Up Smaller and Smaller Flats

Developers continue to build small units that are easier to sell than larger ones


Strong demand for tiny flats has encouraged developers to build more of them in Hong Kong in recent years. More than 5,000 new flats, smaller than 430 sq ft, are in the pipeline every year until 2019―almost triple the average over the past decade. 

"The small flats launched in 2015 saw really high demand, and many more residential flats of this size will be coming onto the market this year," says Henry Mok, a Regional Director with JLL's Hong Kong Capital Markets team.

41 percent of new units expected to complete this year―amounting to about 5,900 flats―will be small flats. In 2018 this number will hit 8,800, accounting for 37 percent of the new units in total, according to JLL estimations. 


Against a backdrop of high property prices, the lump sum payment for small units is comparatively lower, making them more affordable for average salary earners who are keen to own their home. Buyers of small units― chiefly local residents who are first-home buyers―are also eligible to receive the maximum mortgage from the banks. 

"Compared to a single four-bedroom apartment, four studio apartments are easier to sell," points out Mok. "That's why new developments always reserve space for small flats."

JLL helped a developer sell 200 sq ft units in Ma On Shan last summer and again in October, with both launches receiving overwhelming responses. Many of the purchasers were young couples and recent graduates, who came along to the property launches with their parents since they can't afford to purchase flats on their own. 

The buyers plan to either live in the units or rent them out, given that there is no second-hand market for small flats. The second-hand market is usually for people wanting to trade up―moving from a studio flat to a one-bed, or from a one-bed to two-bed, and so on. Rental returns on second-hand small flats are around one or two percent after deducting management fees and government rates.

"Some 'mini-flats' are smaller than a car parking space at around 128 sq ft"

- Henry Mok, Regional Director, Hong Kong Capital Markets

​The highest demand for small flats is in the heart of the city, particularly Causeway Bay and Central, while the lowest demand is in luxury areas—the Peak and Island South especially—where people tend to want bigger living spaces. Mok is also wary of flats that are less than 200 sq ft in places such as Tuen Mun and Yuen Long. "You have to be careful because if you choose to live in the New Territories you will normally be looking for more space and a better living environment," he warns. 

"Some 'mini-flats' are smaller than a car parking space at around 128 sq ft, and you have to fit everything into that, including the bathroom and kitchen. Of course, you can put in a single bed, mount the TV on the wall, install a countertop with a sink and a bathroom with no shower tray, but that's not a great way to live." 

Mok believes that an increasing number of Hong Kong people hoping to buy their own flats can't afford anything other than small flats, since down payments currently stand at 40-50% of a larger flat's value. However, "small flats are not selling cheap," Mok points out. "The smaller the units, the higher the unit rate, but you can at least obtain the maximum mortgage from the bank. 

"If the government eases the mortgage-to-lending ratio and it helps boost transactions of two to three bedroom flats, developers will change their plans to move away from building studios and one-bedroom flats to more livable two to three bedroom units." 

Find out more about Investment Sales and Acquisitions here, or contact Henry Mok.