Micro Homes can only work if there is shared facilities

04:45 AM Oct 18, 2012

DONGGUAN – Even as China’s economy slows from efforts to fight a bubble in high-end housing, waiting in the wings with potential to revive growth is a different housing market: The low end.
Some 50 million of China’s 230 million urban households live in substandard quarters often lacking their own toilet and kitchen, research firm Dragonomics estimates.
The firm figures China will need to build 10 million apartments a year until 2030.
A model apartment on display in Dongguan, a factory town in south-east China, gives an idea what some of these could be like. At the research centre of China’s largest property developer, China Vanke, is an apartment that measures 160 sq ft (14.8 sq m ), about the size of a parking space. The bed folds to make seating. The shower is a vertical tube by the front door.
At about 835 yuan (S$162) a square foot, an apartment that size is relatively affordable at the yuan equivalent of US$21,500 (S$26,200), which is around six times the per-capita disposable income for China’s urban residents. By contrast, the larger apartments that have been the traditional focus of China’s developers could cost as much as 40 years’ income.
Such initiatives offer hope to people like Mr Ou Yibao, a 27-year-old software engineer who lives in a dingy rental in Shenzhen and is currently priced out of ownership. While a focus on building expensive homes from 2005 to 2010 juiced revenue for developers, investors and municipalities, “the government sacrificed the aspirations of a generation to fuel this boom”, Mr Ou said. “People like us are left with little choice but to slave for years to buy a home.”
Figures released last week showed that Beijing’s two-year-old campaign to cool the overheated property market has borne some fruit. Urban housing prices declined 1.4 per cent last month from a year earlier, according to a survey of 100 Chinese cities.
That was a far cry from booming increases seen before the government – worried about unsustainable price rises and an affordability crisis – slapped controls on housing speculation in April 2010. The consequences were far-reaching: A weakening of economic growth to the slowest pace since the financial crisis; a profit squeeze for sectors like cement; and pain that rippled out to suppliers such as iron-ore miners in Australia.
Vanke’s micro-home shows the luxury-obsessed Chinese real-estate industry starting to address the build-up of demand from frustrated young professionals wanting to get on the first rung of the housing ladder and other urban dwellers who simply aspire to upgrade from shanties and dark basements.
Analysts say if the move to build more-affordable homes takes hold, it could help China achieve an economic soft landing and drive the next stage of growth.
Texas-based property investment fund, Century Bridge Capital, which has raised US$170 million to put to work in Chinese real estate, plans to focus on smaller apartments for the owner-occupied market.
“If you build for speculators and make a 70 per cent margin, that’s a grand slam home run, but it’s not sustainable. We are building to meet genuine demand. The margins are smaller, but you can keep hitting single after single for a long time,” said Mr Tom Delatour, Chief Executive.
“Wall Street thinks China’s government has killed the economy by deflating the luxury property bubble,” he said. “In fact, they have saved it.” DOW JONES

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Shared facilities is the only way to go if you want the Micro Homes concept, from shared toilet facilities, shower facilities, to laundry facilities, to lower the cost for homeowners, there is really no necessity to build large homes for families all the time, this is a specialised market that is both affordable and easily manageable for low income singles and families. Shoebox concept will still be popular with built-in toilet facilities if there is a right mix of amenities serving the catchment area and both concepts will ensure housing remains affordable for the poor and low income.
I can easily extend these concepts to hotels and service apartments to maximise returns, creating easily another 500,000 jobs and change the entire landscape of the future.
– Contributed by Oogle.

Author: Gilbert Tan TS

IT expert with more than 20 years experience in Apple, Andriod and Windows PC. Interests include hardware and software, Internet and multimedia. An experienced Real Estate agent, Insurance agent, and a Futures trader.

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