HONG KONG • Could nano flats - billed as one way of solving Hong Kong's chronic housing shortage - be on the way out as quickly as they grabbed the public's attention?
Two years ago, when the developer of a residential project in the New Territories unveiled units smaller than a car parking space, an executive was quoted as saying: "Even the emperor living in a place as big as the Forbidden City still slept on a bed."
Be that as it may, it seems ordinary residents are having second thoughts about super-tiny apartments.
A sale over the weekend at the project, where some dwellings measure just 12 sq m or 129 sq ft, failed to attract much interest, with only two of the 73 units on offer being sold.
"The rise and popularity of nano flats are largely centred on their relative affordability for buyers with limited budgets," said Jones Lang LaSalle head of research Denis Ma. "When housing prices start to sag, demand for these types of properties usually plummets as buyers turn their attention to larger units at the same price point."
A slide in home prices is already under way in Hong Kong. Property prices have declined 6.3 per cent from their August peak, Centaline data shows, while Midland Realty last month said November new-home sales were on track to be the lowest by volume since early 2016.
History suggests small apartments tend to suffer more when there are price adjustments.
The cost of units measuring less than 40 sq m dropped 12 per cent during the 2015-2016 price correction versus a 9 per cent dip for those measuring 70 to 100 sq m, official data shows.
This will come as bad news to home builders hoping to cash in on the short-lived nano flat craze, where units the size of a Tesla Model X were last year selling for around US$500,000 (S$686,000).
Jones Lang LaSalle predicts that 3,300 new nano flats measuring 19 sq m or less will be completed between 2018 and 2020, up by 35 per cent from the previous three-year period.