Hong Kong's lending institutions, having previously shied away from commercial real estate, are now actively financing student housing developments. This shift is primarily fueled by a significant increase in mainland Chinese students enrolling in Hong Kong universities, with over 94,500 student visas approved in 2025, more than double 2022 figures. Government support, including raising the cap on non-local undergraduates, and attractive rental yields of around 5% contribute to this trend. Colliers reports 25 such projects valued at approximately HK$10.7 billion ($1.37 billion) from 2024 to mid-2026, a substantial increase from previous years.
Banks, including local, Chinese, Singaporean, and international lenders, are competing to provide financing. For instance, Bank of China (Hong Kong) secured a HK$1 billion ($128 million) loan to Centaline Investment for converting the Regal Oriental Hotel into student apartments, beating out contenders like Industrial Bank's Hong Kong branch. HSBC Holdings also provided a loan to Singaporean builder Wee Hur Holdings to transform the One Bedford Place office tower in Kowloon into a 500-bed student apartment building, with United Overseas Bank and Oversea-Chinese Banking Corporation also expressing interest. This enthusiasm comes during a broader lending drought in Asia, making student housing an attractive sector for deploying capital.
The demand has expanded to include riskier office-to-dorm conversions, which currently represent about 30% of deals considered by Centaline Investment. While Hong Kong has yet to see a fully operational and successful office conversion, lenders are increasingly willing to finance them, though some express caution and seek protective clauses. Reeves Yan, head of capital markets at CBRE Hong Kong, notes the absence of an "actual exit case in the market yet." Despite concerns about potential oversupply by developers like Wee Hur, the strong demand for student accommodation, with Jones Lang LaSalle predicting a shortfall of 147,200 student beds by 2029, continues to drive investment.
