Supply of new nano flats in 2019-2021 to increase by 60%
Prices of nano flats set to underperform the overall market in the second half of 2019
HONG KONG, 30 July 2019 – More than 3,000 nano flats (flats with a floor area less than 200 sq ft SA) are scheduled for completion between 2019 and 2021, 60% more than the amount built between 2016 and 2018, according to JLL’s latest Residential Sales Market Monitor released today.
Figures from JLL’s research department show that nano flats contributed to around 5% of total new private housing supply in 2019. Though some nano flat developments have recorded strong sales, others have had to resort to steep price cuts to attract buyers. In some instances, we have seen developers offer units at up to 30% lower than the price of units previously listed for sale in the same development.
Henry Mok, senior director of Capital Markets at JLL, said: “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.”
Denis Ma, head of Research at JLL, said: “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. Given the uncertain market outlook, we believe that developers will need to continue to soften asking prices to generate market churn for nano flats. This will ultimately put downward pressure on prices in secondary market. As a result, nano flat prices are expected to underperform the broader market in the second half of this year where we are forecasting housing prices to slide by 0-5% in the second half of 2019.”
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