Interview with Isaac Cheng, vice-chairman of Demosistō: the Hong Kong government must respond to the five demands

HONG KONG (Reuters) – For part-time furniture mover Kong Ngai-lam, 26, home is the bottom half of a bunk bed inside a tiny room that fits little else.

Nearly 200,000 Hong Kong residents like him call a wire cage or bed in partitioned apartments their home.

Making housing more affordable was among outgoing Hong Kong leader Leung Chun-ying’s top priorities when he took office in 2012, but his administration has been unable to rein in skyrocketing prices that have added to discontent in the city.

“Over the past four years, despite a number of measures by the current-term government which has successfully curbed external, investment and speculative demands, the difficulty in achieving home ownership remains an unresolved problem,” Leung said in his swansong policy address on Wednesday.

High property prices and rents posed “the gravest potential hazard to the Hong Kong community as many families have no choice but to live in subdivided units, even in industrial buildings,” Leung added.

Property prices have surged nearly 50 percent to historic highs since he took office, according to government data, and tiny living spaces have become increasingly common.

About 100,000 people under the age of 35, including children, make up half of those occupying such partitioned units, a government report showed. Non-government organisations say the real numbers are higher.

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These units, measuring half the size of a standard carpark space at an average of 62.4 square feet (5.8 square meters), are getting more expensive too.

Median rents surged 10.5 percent to HK$4,200 (420 pounds) in 2015, official data showed. The figure is greater than the 8.4 percent rent increase in private homes over the same period.

Kong now pays $250 monthly rent for his bed space in the cluttered apartment shared with 10 others. A handwritten note warns of eviction if rental payment is late: “We are not the Salvation Army,” it says.

There are no legal guidelines in Hong Kong restricting how small apartments can be, nor any on rent control.

“The biggest issue in Hong Kong is we don’t have any legal restrictions, so the landlords can do whatever they want,” said Kong’s social worker and community organiser at the Society for Community Organization, Sze Lai-shan.

MOSQUITO-SIZED FLATS

“Mini flats” or “mosquito flats” are a growing trend as developers target first-time buyers who have given up hope of ever owning a decent-sized home.

Emperor International Holdings will build flats as small as 61.4 square feet (5.7 square metres), though the measurements exclude kitchen and bathroom; Chun Wo Development Holdings has plans for a residential building catering to young first-time buyers with 128 square feet (11.9 square metres) units.

“Hong Kong’s real estate has gone so expensive, that’s why (developers) are making flats smaller and smaller to make them affordable,” said Edina Wong, senior director of residential services at property consultancy Savills.

Hong Kong’s richest man Li Ka-shing recently said the trend made him feel “uneasy”, even though a residential complex built by his Cheung Kong Property Holdings offers flats smaller than 200 square feet (18.6 square meters). One unit in September sold for HK$2.8 million.

Thomas Lam, senior director at Knight Frank, expects small flats to remain popular in the fshort run as long as prices remain high and tightening measures such as higher stamp duties stay in place.

But a mini apartment is not for everyone.

Freya Tseng, 27, who advises her family on property investments, has stayed away from mini flats.

“If you buy it for yourself, the quality of life will be too low and you won’t be happy living there. If you buy it for investment purposes, it doesn’t have any reserve value,” Tseng said. “It’s a joke.”

By Venus Wu

(Editing by James Pomfret and Jacqueline Wong)