HK Banks Rushing Into Student Housing Loans

Hong Kong’s banking sector has recently developed a strong interest in student accommodation. Several major banks are actively financing the conversion of hotels and office buildings into student dormitories.

For years, banks here have been reluctant to lend against commercial property. Now, they have found a business they actually like: converting old buildings into student housing. With mainland students flocking to the city and the government supporting the sector, these projects are considered a safer investment—and they generate steady rental income.

According to Colliers, there were 25 such deals between 2024 and the first half of this year, with a total value of approximately HK$10.7 billion. Prior to that period, the market was virtually inactive.

Hong Kong has been actively promoting its "Study in Hong Kong" brand. As the number of non-local students increases, the availability of dormitory spaces remains insufficient. JLL estimates that demand from both non-local and local students will reach 128,300 in the 2025/26 academic year, while the supply—from universities and the existing private market—stands at approximately 52,000. This results in a shortfall of about 76,300 beds. With the government raising the cap on self-financed non-local students, demand is projected to rise to roughly 223,800 by 2029/30, compared to a supply of about 76,600. Consequently, the shortage is expected to nearly double to around 147,000 beds.

Money is already in motion. Central Investment purchased Bonham Court in Mid-Levels West last year for HK$335 million and plans to invest an additional HK$60 million to transform it into a modern student residence. The company also paid over HK$1.5 billion for the Regal Oriental Hotel in Kowloon City, intending to convert it into student flats with 1,400 to 1,500 beds—likely the largest student housing project in Hong Kong.

The Regal Oriental conversion has attracted significant interest from multiple banks, clearly demonstrating lenders’ strong confidence in the student housing sector. Separately, Mantop Group sold a hotel for HK$184 million, with the new owner planning to convert it into student dormitories. Even JD.com, the mainland e-commerce giant, is joining the trend. Far East Consortium announced it would sell a former hotel property in Yau Ma Tei to JD Fabulous, a JD.com subsidiary, for HK$750 million. The property is already undergoing conversion of rooms into student units, with full completion expected by the second half of 2026. This marks JD.com’s first investment in student housing in Hong Kong.

"All the banks—local, mainland Chinese, Singaporean, and international—are very interested in this sector," said Jasmine Chiu, a real estate partner at Mayer Brown. "Banks are increasingly keen to provide financing and view student accommodation as an operating business."

The demand is even spilling over into office conversions, which are more complex and historically less profitable. Singapore builder Woh Hup Holdings recently announced that it had secured financing from HSBC to convert One Bedford Place, an office building in Kowloon, into a student residence with approximately 500 beds. The project is currently awaiting regulatory approval.

Source: Hong Kong News 

Editor: Lanlan Wang