Beyond its captivating skyline and rich culture, there’s one thing about Hong Kong that makes living there a bit challenging: miniscule housing space.

So, why are Hong Kong apartments so small? 

The main reason Hong Kong apartments are small is that Hong Kong is relatively small yet houses 7.1 million people. So, land is in scarce supply while housing demand is high. 

As a result, developers try to accommodate as many people in each property as possible, leading to ever-smaller apartments.

Here’s a further look at Hong Kong’s expensive land and rent prices, as well as other factors that explain why Hong Kong apartments are comparably smaller to those of other metropolitan cities.

The Reasons Hong Kong Apartments Are Small

1. Hong Kong’s Exorbitant Land Prices

The majority of the property that may be developed is in the hands of the government, which makes land available to developers through real estate brokers.

Land in Hong Kong is selling for record-high prices, and more and more developers on the Chinese mainland are buying it. Purchasers pay exceedingly high prices to have land developed into new apartments and rental spaces.

To illustrate the pricing in the Hong Kong real estate market, in December 2021, it was reported that two Chinese developers recently paid a record of HK$8.84 billion (US$1.13 billion) for a parcel of residential land. The price was over 50% more than the market value.

With prices like that, it only makes sense that developers would try to get money back from their investment… and one of the ways to do that is to get as much rent as possible from housing developments, as you’ll see in the next point.

2. Hong Kong’s High Rent Prices

Hong Kong is famous for its unbelievably high rents. According to the latest annual Demographia International Housing Affordability Survey, Hong Kong is again the most expensive housing market in the world for the seventh consecutive year.

That said, according to the poll, Hong Kong ranks 18th when median property prices are divided by gross yearly median household income. 

So, if a person earns $50,000 per year, the cost of their home would be $900,000.

In any case, this is still high, and it motivates developers to cram as many renters as possible into a location for higher returns.

3. Hong Kong’s Lack of Space and Scarce Land Area

The vast bulk of the land in Hong Kong is in mountainous, unbuildable locations. 

In addition, a sizable section of these land areas have been declared as nature reserves, meaning that any unauthorised development of the land would be strongly opposed.

This also means you can’t just go ahead and build apartment buildings on the remaining flat ground. If it’s a nature reserve, it can’t be developed into housing.

This tells you that what little space can be used for housing has to be used with as little waste as possible. This is why developers try to eke out as much housing space as they can from each plot of land or structure.

4. Hong Kong’s Economy

Hong Kong’s economy contributes to its need for housing. 

With more than seven million residents spanning 1,106 square kilometres, the city is already the fourth most densely populated among sovereign states or territories (427 sq miles). 

However, it’s also a major trade hub, which means there is a lot of demand for people to live and work in one of the financial centres of the world and the primary entryway to China, the country with the most inhabitants.

It is no secret that Hong Kong has one of the world’s most tax-friendly economies. The fact that a sizable portion of the government’s income comes from land sales is also one of the reasons it is able to keep taxes so low.

There is little incentive for the government to seriously reduce Hong Kong’s housing costs if property values decline because the government cannot generate as much revenue.

In fact, if property values fell too far, the government may have to reconsider its tax collection strategy. All of this only adds to the pressure that keeps housing demand high and supply low.

What is the average size of a Hong Kong apartment?

As of 2022, the average size of an apartment in Hong Kong for a family of 3 is approximately 484 sq. ft., and the average single Hong Konger lives in  161 sq.ft. 

It gets quite alarming when you begin to think about the spaces below the average, such as public rental housing which provides individuals about 130 sq. ft. per capita.

With Hong Kong’s population of over 7 million and 30% of those being housed in the conditions mentioned above, that’s quite a number of small or micro apartments.

When did micro apartments start appearing in Hong Kong?

In 2015, there was a notable upward trend in the construction of smaller apartments, especially after the Hong Kong government eased its laws mandating natural light and ventilation.

In the recent decades, developers were forced to construct inside windows onto courtyards or air shafts to provide separate kitchens with light and ventilation.

This was since fire-safety rules mandated that they be separated from one another by a wall and have their own window.

The new rules permitted open kitchens that were lighted by a single window at the opposite end of the apartment. This was largely in response to the rising need for livable spaces in the city. 

Since then, developers adapted and started building small, adjacent flats with a kitchenette next to the entrance that faced a single corridor. 

On the other hand, a grim look at Hong Kong’s housing issues sheds light on the infamous “coffin apartments”, which are small flats that are illegally subdivided into 20 smaller units.

Overall, it’s an interesting depiction of Hong Kong’s distinct geography and history passed down from when it was once a British colony. 

How much does a small apartment cost in Hong Kong?

For its average size and price, Hong Kong housing is expensive because of the city’s dense population and scarce land resources.

On top of that, the demand for living spaces inevitably plays a role in the high cost of apartment spaces. 

To address these matters, developers are continually trying to make innovative spaces to make up for the lack of space in apartments.

Fortunately, another emerging option is coliving services, where tenants live together in the same space to save on rent. It’s worth checking out for individuals who are on a tighter budget.

The table below is an estimation based on Numbeo showing the average cost of an apartment in Hong Kong, both inside and outside the city centre.