News release

The completion of small flats in 2020 will be the highest in ten years

More medium-sized units will be built over the medium term as buyer preferences shift from smaller to bigger properties

January 07, 2020

HONG KONG, 7 January 2020 – Around 11,900 Class A units (with saleable area less than 430 sq ft) are expected to be completed in 2020, accounting for 55% of total supply. The completion of small flats this year will be the highest in ten years, according to JLL’s latest Residential Sales Market Monitor released today. The firm expects developers will have to further soften asking prices in order to offload the bulk of this stock.

According to statistics from the Rating and Valuation Department, Class A properties surged to 45% of total new supply in 2019, from about 5% of market share in 2010. Meanwhile, the proportion of Class B flats (units with saleable area between 430 and 752 sq ft) have slipped from 50% to 34% in 2019, while Class C flats (units with saleable area between 753 and 1,075 sq ft) also dropped from 34% to 12%.

The glut of smaller units in the market is owed to developers building smaller units, and even nano flats. This is to ensure that the supply is readily digested and caters to first-time buyers faced with increasingly challenging down payments as a result of continually growing house prices.

Henry Mok, Senior Director of Capital Markets at JLL, said: “We estimate the supply of Class A units will grow further to around 11,900 this year. As such, developers will have to further soften asking prices in order to offload the bulk of stock in view of the upcoming vacancy tax and a weakened market outlook,”

With the government recently relaxing mortgage rules by lifting the 90% loan-to-value (LTV) ratio cap for properties priced from HKD 4 million to HKD 8 million in the last quarter of 2019, JLL sees a potential shift in buyers’ preferences to bigger units.

Nelson Wong, Head of Research at JLL for Hong Kong and Greater China, said: “A first-time buyer who could only afford the lump sum for a typical Class A flat before will now be able to afford a down payment for a property within the range of Class B apartments in Hong Kong. We expect a gradual change in residential building schemes to fit the switch in buying preferences over the medium term, with more medium-sized units to be built.”

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of more than 93,000 as of September 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit