Rise of the Nano House

22nd of July, 2017

Moore’s Law states that computer processor speeds will double every two years, in a similar way Ricardo’s Law (of Rent) explains the continually diminishing size of Hong Kong apartments!

The relentless technological advancements that are driving the rise of Nano Computers are also having the same effect on apartment sizes in Hong Kong.

You see at $25,000 per m2 Hong Kong apartment space is not small change. It’s no wonder developers are doing their best to extract the maximum profit from their sites by shrinking apartment sizes and building sky high – the Cantillon Effect explains this. (To read about the Cantillon Effect click here).

These Micro Flats or as I like to call them, Nano-Apartments, are typically as small as 20m2 and cost $500,000!

They can be as small as 11m2 in size, but rent for A$660 per month on less than a 3% yield. Remember that 12m2 is an average parking spot!

The rise of the Nano-Apartment brings about a lot of questions about the state of the Hong Kong property market.

The Hong Kong House Price index has risen from approximately 35 in 2004 to an amazing +150. That is a rise of over 300%!

Its important to remember that this time its not different. That each cycle is the same, but different. Same drivers. Same economic process. But each cycle will manifest slightly differently due to such things as investor memory, the current legislation and technological changes.

Sadly, you don’t need to study history very deeply to realise that this limited access property is not a new phenomenon.

Understanding economic history and the underlying drivers of the economy make profitable investing decisions easier to make.

At Calnan Flack we strive to help investors understand and invest with the cycle hence making more profitable investment decisions.

Watch this Video from Aljazeera to learn more.

Let’s get started

If you want to avoid the mistakes of not understanding the dangers of investing without an understanding of the Economic Cycle, then why not have a chat to us about how we can help?

You have nothing to lose except a few minutes of your time and everything to gain.

So… let’s get started.

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Disclaimer: Any opinions or recommendations expressed here do not purport to Financial Advice but rather should be considered General Advice and does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate to you and whether you should act upon it. Should Financial Advice be sought, we suggest you seek such advice from an appropriately qualified advisor. Any growth rates, yields, rental income, tax rates, interest rates, depreciation rates, inflation rates Dividends per Share (DPS) and Earning Per Share (EPS) etc shown are estimates only and should not be used as a guide to future performance. Past performance is not necessarily a guide to future performance and should not be relied upon for this purpose. Authorised Representative of PGW Financial Services Pty Ltd – AFSL 384713 ABN 15 123 835 441.