(Yicai) April 15 -- Student dormitories are emerging as a key segment of Hong Kong’s property investment market, with investors increasingly acquiring existing hotels and other buildings for conversion into student accommodation.

The trend is being driven by a persistent shortage of university housing and a rising number of non-local students in the city. Real estate agency Centaline Property recently took over the Regal Oriental Hotel in Kowloon City, adding to a growing list of projects targeting the sector.

Centaline invested more than HKD1.5 billion (USD190 million) to acquire the hotel and plans to redevelop the former landmark into student dormitories, with total investment expected to reach about HKD2 billion. The project is expected to provide about 1,500 beds, with part of the development scheduled to open in September.

The Regal Oriental Hotel deal is Centaline’s third student housing conversion project in nearly two years. In 2024, it invested HKD180 million (USD23 million) to acquire the Popway Hotel in Tsim Sha Tsui. In 2025, it spent about HKD335 million on a property in Mid-Levels West, which will also be converted into student accommodation.

Such deals have become increasingly common in Hong Kong. Other investors entering the market include China Merchants Commercial REIT and property manager CR Longdation.

Demand fundamentals remain strong. On-campus accommodation at Hong Kong universities has long fallen short of demand, while many non-local students have had to arrange housing on their own.

In 2023, the Hong Kong government raised the admission quota for non-local students from 20 percent to 40 percent, and in 2025 increased it again to 50 percent.

Investment management company Colliers said that as the Hong Kong government actively promotes the “Study in Hong Kong” brand, the number of non-local full-time students in the city continues to rise. Tight housing supply has turned student dormitories into one of the most closely watched alternative asset classes in the property market, supported by resilience and stable returns.

A representative from alternative asset manager Blackstone said in the second half of last year that converting hotels into student dormitories or other residential uses has promising prospects in Hong Kong’s property market.

According to a report by property consultancy Knight Frank, expected yields from converting properties into student dormitories range from 4.5 percent to 8 percent, well above returns from traditional residential properties in Hong Kong.

Editor: Emmi Laine