Completion of nano flats estimates to double in 2022
Government could adopt multiple measures to raise living space of citizens
HONG KONG, 8 February 2022 – The completion of nano flats (saleable floor area of 215 sq ft or less) is estimated to double in 2022, according to JLL's research department.
2,015 nano flats are forecasted for completion this year, compared to 960 units in 2021. Meanwhile, figures from the Rating and Valuation Department show the stock of nano flats has gradually increased from 9,601 in 2016 to 12,175 in 2020, or about 1% of the total private housing stock.
The Development Bureau recently announced that a minimum flat size restriction of no less than 280 sq ft (26 sq m) will apply to residential sites sold through Government tender, in an attempt to regulate the supply of nano flats in the private market. However, private development or redevelopment projects will remain unaffected by such size limit requirement.
Given the satisfactory sales performance of nano flat projects such as 'The Met Azure' and 'Mangrove' last year, JLL's Residential Sales Market Monitor forecasts that developers are likely to keep nano flats as part of their offerings to address demand. In addition to the size restriction, there are other measures that can serve the purpose of raising the living space of residents.
Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL, said: "The Government should take the lead in providing adequate housing for citizens of limited means. Public housing, either for rental or subsidised sale, can serve as affordable alternatives to nano flats and satisfy the fundamental need for shelter. With sufficient decent public housing for most, the demand for nano flats will fall naturally. However, the average waiting time for applicants to be housed to PRH (Public Rental Housing) in 2021 stood at 5.9 years, the highest since 1999, reflecting critical shortage in public housing.
Another measure mentioned by Lee is to provide bonus plot ratio for redevelopment projects if they follow a certain minimum size guideline. The bonus plot ratio will not only encourage development of larger flats, but also boost supply into the market.
Nelson Wong, Head of Research at JLL in Greater China, said: "Raising the maximum property value limit applicable for mortgage loans of high LTV ratio could render larger flats more accessible. Buyers with down-payment budget constraints are pivoted to flats of smaller size under the current rules. By raising the limit of property value for high-LTV-ratio loans and smoothing out the mortgage LTV ratio waterfall (especially at HKD 10 million), home buyers are open to more options, driving demand for larger flats."
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