(SINGAPORE 2026.1.13） By December last year, three mainland Chinese investors spent HK$1.3 billion (around S$214.5 million) acquiring three Hong Kong hotels to convert into student residences. Two of these deals involved buyers linked to state-owned enterprises.
Together with six other hotels sold for the same purpose during the year, a total of nine such properties are set to become student housing, with combined transaction value exceeding HK$5.4 billion, according to the column Metime in the Chinese tech media platform 36 Kr.
The trend of converting Hong Kong hotels into student housing predates 2025. In 2022, Hong Kong’s Wang On Group (宏安集团), in partnership with foreign investor Angelo, Gordon & Co., acquired the Pentahotel Kowloon from New World Development for about HK$2 billion. By 2024, it had been transformed into “Yuet Sun House Kai Tak” (日新舍启德), converting 695 hotel rooms into 720 student residences to accommodate 1,424 students. It achieved a 97% occupancy rate in its first rental cycle.
By 2025, hotel-to-student-housing conversions were accelerating sharply. Is this driven by rising demand or policy push?
Metime notes that the main factor is Hong Kong’s acute shortage of student accommodation. In the 2023/2024 academic year, the city faced a shortfall of 47,600 beds for non-local students. Of the 62,000 students granted visas and entry permits that year, fewer than 15,000 could secure university-provided housing.
A Legislative Council fact sheet shows that in 2023/2024, about 77% of non-local students enrolled in Hong Kong’s university-funded programmes came from mainland China, with around 19% from other parts of Asia and 4% from elsewhere.
As of August 2025, despite Hong Kong universities themselves acquiring hotels for conversion, the student-to-bed ratio across the city’s eight major campuses remained at 3.4:1, pushing many students into the private rental market.
Meanwhile, the government had raised the cap on non-local student intake—from 20% to 40% in 2023, and further to 50% in 2025. Following these moves, Cushman & Wakefield, the US-based global real estate services firm, estimated that annual incremental demand for student housing in Hong Kong would reach 15,700 beds from the policy rollout through the 2027/2028 academic year.
Even with an additional 7,900 beds expected by 2027, Metime notes that the overall shortfall would still be around 55,000 beds, including both on-campus and future private accommodations.
To ease pressures, the Development Bureau and Education Bureau launched the “Urban Student Residence Scheme” last year, allowing hotels, office buildings, and other commercial properties to be converted into student housing without obtaining standard planning approvals or the need to remove “excess floor area.”
Some student residences are now legally recognized as “hotels,” and building code restrictions on height, floor area, and density have been relaxed, enabling faster, larger-scale conversions, ideally within 18 months.
Under the scheme, existing hotels emerged as highly attractive assets for conversion, as the new rules cut red tape, accelerated approvals, and offered greater flexibility in design and construction. Ho Pui-ling, Permanent Secretary for Development (Planning and Lands), said the scheme shortens conversion timelines and lowers entry costs, helping meet the rising demand.
Policy support quickly translated into deal-making. From January to October 2025, announced investments in hotel and commercial building conversions reached HK$3.3 billion—2.5 times the previous year—as developers and funds rushed into the student housing sector.
From an investment perspective, Metime pointed out, student housing offers controllable costs and stable returns. Hotels are high-maintenance assets, whereas student residences require fewer services but deliver strong, predictable cash flow. Unlike serviced apartments or long-term rentals with monthly payments, student housing typically involves annual leases with upfront payment, ensuring high occupancy.
Rental growth has also been notable: the Y83 student housing brand raised monthly rents from HK$7,000–HK$12,500 in 2023 to HK$8,300–HK$14,800 in 2024, a 14% to 18% increase. Knight Frank, a global real estate consultancy, reports investment yields of 5% to 8% for student housing—well above 2% to 3% for residential property and 3.7% for Grade-A offices.
Investors also have clear exit options. Knight Frank notes that by combining innovative conversions, university partnerships, and policy incentives, they can earn stable income and liquidity premiums—such as partially exiting by placing the property into a Real Estate Investment Trust (REIT).
With tight supply, favorable policies, and attractive returns, student housing is expected to remain one of Hong Kong’s few commercial real estate segments with continuously growing demand, Metime concluded.
