2,015 nano flats to be completed in 2022

Compared to 2021, the number of nano flats for completion doubled.

The number of nano flats expected to be completed in 2022 is 2,015, which is double the 2021 estimate of 906, data from JLL Research showed.

Stocks of nano flats is expected to increase further in 2022, as the estimated number of units for completion doubled to 2,015 from 906 in 2021, data from JLL Research showed.

The supply of nano flats, which has a saleable floor area of 215 square feet (sq ft) or less, has been increasing since 2016 and as of 2020 it already reached 12,175, making up about 1% of private housing stock.

The government has already attempted to regulate the supply of nano flats in the private market by implementing a minimum flat size restriction of no less than 280 sq ft (26 square metres) to residential sites sold through Government tender.

However, the private development or redevelopment projects are unaffected by the measure.

Since nano plat projects are also still getting demand, like The Met Azure and Mangrove last year, JLL Research said private developers are likely to keep nano flats as part of their offerings.

The analyst however said there are other ways that the government can raise the living space of residents.

“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,” Norry Lee, senior director of Projects Strategy and Consultancy Department at JLL, said.

Lee also proposes providing a bonus plot ratio for redevelopment projects if they follow a certain minimum size guideline.

“The bonus plot ratio will not only encourage the development of larger flats but also boost supply into the market,” he said.

Meanwhile,  Nelson Wong, head of research at JLL in Greater China, proposed to raise the “maximum property value limit applicable for mortgage loans of high LTV ratio.”

“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,” Wong said.