It will account for roughly 5% of the total new private housing supply in 2019.
Over 3,000 nano flats are scheduled for completion between 2019 and 2021, which is 60% more than the amount built between 2016 and 2018, according to JLL’s Residential Sales Market Monitor.
These flats, which are units typically with saleable floor area of 200 sq ft or less, is expected to account for around 5% of total new private housing supply in 2019. However, JLL noted that its supply surge could outpace its demand, which could prompt developers to adjust asking prices in order to attract more buyers in the primary market and in turn, affect prices in the secondary market as well.
One example cited is the T-Plus nano-flat development in Tuen Min, where 98% of the 344 launched units were sold. The strong market take-up was driven by price cuts of up to 30% and lump sums for as low as $1.74m.
“The relatively more attractive lump sums involved in the purchase of nano flats has led to buyers piling into the market. With the growth in salaries lagging home prices, developers are now having to adjust the sizes of flats built to maintain smaller lump sums that can be readily absorbed by buyers,” Henry Mok, senior director of capital markets at JLL, said.
Because of nano-flats’ supply surge and softening prices, JLL expects this to affect the overall housing prices as it could slide 0-5% in 2019.
“Though the lump sums involved in purchasing nano flats are attractive, the prices of nano flats tend to underperform during market downturns since offloading units in the secondary market is only possible with steep price cuts,” said Denis Ma, head of research at JLL.
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