Surge of Int’nl Students To Cause Hong Kong a Shortfall of 59,500 Student Beds by 2027-28

Key Points

• Hong Kong is experiencing rapid growth in its international student population, with projections suggesting a 46% increase by 2027-28.
• This surge in students has resulted in a notable shortage of accommodation, leading to a significant rise in rents, up by 15% in the past year.
• To address the accommodation shortage, hotels are being converted into student accommodations, presenting new opportunities and challenges in the real estate market.

According to industry insiders in Hong Kong student news, the high population of international students in Hong Kong has widened the gap between the demand for Hong Kong student accommodation and the availability of beds. 

Rents for non-locals who attend universities in Hong Kong for international students have grown at enormous rates in the past 12 months, jumping by 15 percent, according to Oscar Chan, head of capital markets at JLL in Hong Kong.

The Hong Kong student accommodation market is set to burgeon by the year 2027-28. The numbers are set to increase at an exponential rate, expected to rise by 60% in the same time span according to the consultancy company.

This increase of international students in Hong Kong has created a new phenomenon where hotels have been converted into student spaces since 2022. International students in Hong Kong are set to increase to 92,000 in 2027-28 as compared to 63,200 in 2022-23. This will be a 46% surge, a great increase to its existing student population.

On the flip side, however, university-owned student beds for non-local students are set to only grow from 21,000 to 27,000 in the same time frame. Therefore, demand for student beds for international students in Hong Kong will increase from 37,200 to 59,500 in this 5-year time frame.

According to JLL, about 10 three or four-star hotels are available for conversion into student accommodations currently. The trend of converting hotels into student housing outlets has been an observable trend for the last couple of years. According to CBRE, over the past 24 months, the region saw eight hotel deals, out of which five were converted into private student accommodations.

In January 2024, global investment firm PGIM shook hands with Dash Living to purchase Ovolo Sheung Wan, a former 56-room 4-star hotel. This property is set to be converted into co-living spaces aimed at students for short and long-term accommodation options.

Another example of a similar phenomenon can be observed when you look at Hong Kong-based developers Wang On Properties, who are planning to turn a 695-room Pentahtel in Kowloon into an even bigger 720-room property targeting non-locals who attend universities in Hong Kong for international students.

Are Developers Ready To Diversify Their Portfolios?

Macro Liao, CBRE’s senior manager for the hotels and hospitality sector in Hong Kong, has admitted that since interest rates began surging in 2022, investors have become more cautious about expanding their real estate portfolios.

“Finding well-located redevelopment sites in the city with convincing return metrics remains challenging in the current market sentiment,” said Liao.

Antonio Wu, head of capital markets for Greater China at Knight Frank, has a different point of view and said, “Student housing is one of the key sectors of the living sector, and there are still investors who are keen to go into this sector.”

Investors continue to maintain a positive outlook towards the Hong Kong student accommodation market when one looks at the number of hotel conversions upcoming this year.

“I expect this sector will continue to grow, and it would not surprise me to see a couple more projects concluded this year. It is likely that we will see some private equity joint ventures with one or two local operators for hotel conversions.” added Wu.

And the growing interest is borne out of successful precedents. Rents at Y83, the city’s leading student hostel, have grown upwards of 10% between 2022 and 2024, according to JLL. Additionally, student occupancy rates in the private sector are running 100%, averaging about HK$5,200 to HK$14,800.

This Hong Kong student news also reveals that the region will continue seeing 2-3 hotel conversions each year for the next 2-5 years when once looks at the popularity of universities in Hong Kong for international students. These conversions will be seen in areas near key universities where the net income that is generated from a student housing business will be greater than that of a hotel, according to Colliers.

“The high interest rate environment, and the need for refinancing on certain hotels or other assets, is placing some pressure on certain owners, which may result in more favourable pricing for buyers and present more options for conversion.” said Shaman Chellaram, senior director in Asia for hotel advisory.

TL;DR

The surge in the population of international students in Hong Kong has widened the accommodation gap, leading to a 15% rent increase in the past year. By 2027-28, the student population is expected to rise by 46%, outstripping available beds. Hotels are being converted into student housing to meet demand, with 10 potential conversions currently. Investors remain interested despite challenges, with expectations of 2-3 conversions annually for the next 2-5 years. High occupancy rates and rising rents indicate a lucrative market for student housing.

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