You Could Barely Squeeze a Tesla Into This $500K Apartment
Fancy an apartment the size of a Tesla Model X?
That’s about 161 square feet — and the size of a Hong Kong micro-apartment sold by property giant Henderson Land Development Co. for just less than $500,000. An actual Tesla Model X in Hong Kong starts at around $150,000.
As Hong Kong housing prices reach new highs and keep the city the most unaffordable for housing in the world, developers including billionaire Li Ka-shing’s Cheung Kong Property Holdings Ltd., Kowloon Development Co. and Henderson Land have been offering more and more units of smaller and smaller size. Another developer, Chun Wo Property Development Ltd., plans to build apartments as small as 128 square feet — about the size of a California garden shed.
While small apartments were just 5 percent of new housing in 2010, they jumped to 27 percent as of last year, according to government figures that forecast an increase to 43 percent next year. Yet their prices climbed 99 percent in 2010-2016 -- more than twice as fast as bigger homes that are unaffordable for the majority of Hong Kong’s population.
“The pool of buyers for small flats is getting bigger and bigger because people have to downgrade their expectations of the size of flats they can live in,” said Nicole Wong, regional head of property research at CLSA Ltd. in Hong Kong.
The higher cost of smaller units is demonstrated by the square footage price: At a Kowloon City development, a 181 square foot apartment on a high floor sold in May for HK$25,897 ($3,321) a square foot, or HK$4.69 million. A larger apartment that’s similarly positioned sold two days later for HK$23,047 a square foot — a HK$2,183 difference.
The trend reflects the unintended consequences of government policies meant to cool the property market, which are instead driving demand for the smallest apartments. Developers, looking to help the government achieve supply targets while aiming to lower the buyer’s price threshold, need to recover the record prices they’re spending at land auctions — so they’re squeezing more units into a single plot of land.
Even Hong Kong's actual parking spaces cost more than homes in much of the developed world. One in a prime building of Hong Kong sold for the equivalent of $664,300 in April, local newspaper Ming Pao reported this week.
Incoming Chief Executive Carrie Lam, who takes over on July 1, the 20th anniversary of Hong Kong’s return to Chinese rule, has promised to increase the home ownership rate by providing government help for people too wealthy for public housing and too poor to afford an apartment of their own.
Take a look at a Hong Kong microflat with this 360 video . Use your mouse to move around.
The government, which champions the free market, has no immediate plans to prevent housing size from getting ever smaller.
“At this stage the government leaves flexibility to the market so that developers can respond to the needs of the market appropriately,” said Terry Wong, a government spokesman.
—With assistance from Adrian Leung, Alex Millson, Alfred Liu and Yue Qiu.