
Rents for Hong Kong’s smaller-sized flats are rising even as the city’s economy shrinks and overall home rents slide to the lowest level in 22 months.
Leases on units measuring 200 square feet and smaller are proving more resilient than for larger units, with some renters paying record rates for them, according to local property agencies.
In one case, a 203 sq ft unit in Tsing Yi, barely big enough to fit a bed and a couch, rented for HK$69 (US$8.86) per sq ft – comparable to levels fetched by flats located in luxury districts on Hong Kong Island such as Mid-Levels and The Peak. An Australian expat paid HK$14,000 a month for the unit in The Met Azure, the highest rental in the district in per-square-foot terms, according to Ricacorp Properties.
The smaller initial capital outlay makes such flats more attractive to those who are choosing to rent instead of buy while they take a cautious approach amid the current market and economic environment, analysts said.

People pass residential property advertisements in To Kwa Wan on October 7, 2022. The area recently saw a tiny flat rent for a district-record price of HK$69 per square foot. Photo: Edmond So
Lenders in Hong Kong last month raised their prime rates again to a 14-year high, causing many potential buyers to choose to rent and delay their home purchases. The city’s infamous “nano flats” tend to require a smaller lump sum outlay, even though they are more expensive in square-foot terms, they said.
“The economy’s not promising, so people choose to rent a cheaper flat,” said Buggle Lau Kai-fai, chief analyst at Midland Realty. “The other thing is some of the buyers are adopting a wait-and-see approach. For the short term, these potential buyers choose to stay in smaller units to save money.”
Last month, government officials cut their full-year forecast for Hong Kong’s economic growth to a 3.2 per cent contraction, versus an earlike projection of between 0.5 per cent growth and 0.5 per cent contraction. They cited the lingering effects of the Covid-19 pandemic and a deteriorating external environment.
In the third quarter, the city’s economic output fell by 4.5 per cent from a year earlier, worse than the 1.3 per cent contraction in the preceding quarter. In the first three quarters, the economy shrank 3.3 per cent from a year ago.
“The latest rental transactions indicate that the smaller-sized units command higher rent on a per-square-foot basis,” Lau said. “Rents for smaller units ranged from HK$45 to HK$60 per square foot, whereas rents for two-bedroom and bigger units ranged from HK$38 to HK$48.”
In Kowloon City, a 166-sq ft flat located on a lower floor of Ava 55 was leased out recently for HK$9,800, or HK$59 psf, Wong Ka Lok, chief senior sales manager of Midland Realty East Kowloon One Kai Tak Branch, said in a statement. In comparison, a 328-sq ft unit in the same development is being advertised for HK$14,500, or HK$44.20 per square foot.
Overall prices of Hong Kong’s lived-in homes have declined by 10.5 per cent this year, the latest data from the government show. On the other hand, rents have slipped by a mere 1.75 per cent in the same period.
Rental units smaller than 40 square metres (430.5 sq ft) outperformed bigger units in the first three quarters. Flats in the smaller category saw rents decline between 0.32 per cent and 1.55 per cent, according to data from the Rating and Valuation Department. Bigger flats experienced a 0.74 per cent gain to 21 per cent drop.
Monthly rents in the secondary market fell in October to the lowest level since February 2020, according to an index tracked by Centaline Property.
The preference for smaller units is also affecting the luxury rental market, according to Aradhana Khemaney, head of residential services at Savills.
“Most of our clients are coming with smaller budgets, and smaller budgets mean smaller flats,” she said. “So we do see them downsizing a lot.”
The residential leasing market is likely to perform better than the sales market given that interest rate may continue to rise, Khemaney added.
But not all tiny flat owners are lucky.
Camelia Lai, owner of a 180-sq ft studio at The Zutten in Ma Tau Kok, To Kwa Wan, leased the flat at the end of August for HK$10,500, or HK$58.30 psf, down from her previous tenant’s rent of HK$10,800 (HK$60 psf). Her leasing agent suggested the price cut because of the supply of new flats in the area.
Midland’s Lau believes that strong leasing demand for tiny flats is likely to be short-lived given that the Hong Kong government is lowering the threshold on home mortgages as a way to improve accessibility to housing in the city.
In September, the Hong Kong Monetary Authority relaxed its stress-test requirements for new mortgage borrowers by 100 basis points. The new requirement allows new borrowers to prove that they have income to pay their mortgages even when the interest rate increases by 2 percentage points from the time that they applied for the loan, as opposed to a more stringent 3 percentage points previously.
The record for tiny flats in Hong Kong stands at HK$91.30 psf, a level reached in 2018 when a 197-sq ft flat at Artisan House in Sai Ying Pun fetched HK$18,000 a month, according to Sunny Wong, Mid-Levels West branch manager at Centaline.