Valuer Insights
Investing in Residential Care Homes for the Elderly in Hong Kong
June 25, 2025
Contact
Terence Yeung
Director, Valuation & Advisory Services, Hong Kong
1. Background
Against the backdrop of sluggish economy and gloomy outlook, property sector such as office and retails experiences significant correction in terms of capital value and rental rates. Alternative assets offering attractive yields commanded attentions from investors.
One such asset class, often overlooked due to its complex due diligence requirements and long-term investment horizon, is the Residential Care Home for the Elderly (RCHE). However, with rising yields and notable recent transactions, this sector is regaining momentum. In this article, we provide an overview of the RCHE sector in Hong Kong and highlight key considerations for investors exploring opportunities in this space.
2. Market Landscape
According to the Social Welfare Department (SWD), as of 2024, there are approximately 819 licensed RCHEs in Hong Kong, offering a total of around 76,000 residential care places across various schemes. RCHEs are regulated under Cap. 459 (Residential Care Homes (Elderly Persons) Ordinance).
RCHEs in Hong Kong can generally be classified into the following categories:
Among the 614 private RCHEs, 195 have joined the Enhanced Bought Place Scheme (EBPS), where the government subsidizes places at approximately HK$11,000 per bed per month. Under this scheme, residents only need to pay an additional HK$1,763 (Grade 1) or HK$1,656 (Grade 2) monthly. Separately, the Residential Care Services Voucher for the Elderly scheme offers up to HK$16,435 per month in government subsidy per eligible individual, adding another layer of support for residents and operators alike.
Driven by strong demographic trends and supportive government policies, occupancy rates across the sector remain high, especially for subsidized homes.
Summary of the current RCHE landscape:
Source: SWD annual statistics, operator’s annual report, Legco document on RCHE
3. Investment Considerations and Transaction Analysis
Recent transactions in the RCHE sector have predominantly involved private homes, particularly those participating in the EBPS. These assets are generally favoured for their stable cash flows and high occupancy rates. For EBPS-participating RCHEs, up to 50% of the beds may be secured through government subsidy contracts, providing a dependable revenue stream.
Since many RCHE residents are referred through public hospitals or the Social Welfare Department (SWD), and most receive government subsidies, revenue growth is largely capped by public funding levels. As a result, RCHE operators typically have limited affordability for rent, with unit rents commonly ranging between HK$30–40 per sq.ft. per month.
Case Study: Granyet Care Group – 6–14 Yan Ching Street, Tuen Mun
One notable transaction involves an RCHE premises at 6–14 Yan Ching Street, Tuen Mun which was transacted at HK$118 million. The property comprises 24,700 sq.ft. GFA, providing 148 licensed beds, and commands a monthly passing rent of HK$835,000, or HK$34/sq.ft., representing a remarkable 8.5% yield on passing income. Similar transactions happened this year provide a yield ranges from 7.0% to 8.6%:-
Comparable Transactions Summary (2025 YTD)
Key Observations from Recent Transactions
Final Thoughts
As Hong Kong’s elderly care sector evolves, it presents a rare blend of social impact and investment potential. With the right insights and strategic approach, investors can tap into a resilient, high yield asset class.
CBRE stands ready to support your journey with market intelligence, technical expertise, and end-to-end advisory services tailored to your investment goals.
Against the backdrop of sluggish economy and gloomy outlook, property sector such as office and retails experiences significant correction in terms of capital value and rental rates. Alternative assets offering attractive yields commanded attentions from investors.
One such asset class, often overlooked due to its complex due diligence requirements and long-term investment horizon, is the Residential Care Home for the Elderly (RCHE). However, with rising yields and notable recent transactions, this sector is regaining momentum. In this article, we provide an overview of the RCHE sector in Hong Kong and highlight key considerations for investors exploring opportunities in this space.
2. Market Landscape
According to the Social Welfare Department (SWD), as of 2024, there are approximately 819 licensed RCHEs in Hong Kong, offering a total of around 76,000 residential care places across various schemes. RCHEs are regulated under Cap. 459 (Residential Care Homes (Elderly Persons) Ordinance).
RCHEs in Hong Kong can generally be classified into the following categories:
- Subvented Homes – fully funded and operated by NGOs
- Contract Homes – operated under government contracts
- Self-financing Homes – NGO-run but non-subsidized
- Private Homes – run by private operators, some participating in government subsidy schemes
Among the 614 private RCHEs, 195 have joined the Enhanced Bought Place Scheme (EBPS), where the government subsidizes places at approximately HK$11,000 per bed per month. Under this scheme, residents only need to pay an additional HK$1,763 (Grade 1) or HK$1,656 (Grade 2) monthly. Separately, the Residential Care Services Voucher for the Elderly scheme offers up to HK$16,435 per month in government subsidy per eligible individual, adding another layer of support for residents and operators alike.
Driven by strong demographic trends and supportive government policies, occupancy rates across the sector remain high, especially for subsidized homes.
Summary of the current RCHE landscape:
Source: SWD annual statistics, operator’s annual report, Legco document on RCHE
3. Investment Considerations and Transaction Analysis
Recent transactions in the RCHE sector have predominantly involved private homes, particularly those participating in the EBPS. These assets are generally favoured for their stable cash flows and high occupancy rates. For EBPS-participating RCHEs, up to 50% of the beds may be secured through government subsidy contracts, providing a dependable revenue stream.
Since many RCHE residents are referred through public hospitals or the Social Welfare Department (SWD), and most receive government subsidies, revenue growth is largely capped by public funding levels. As a result, RCHE operators typically have limited affordability for rent, with unit rents commonly ranging between HK$30–40 per sq.ft. per month.
Case Study: Granyet Care Group – 6–14 Yan Ching Street, Tuen Mun
One notable transaction involves an RCHE premises at 6–14 Yan Ching Street, Tuen Mun which was transacted at HK$118 million. The property comprises 24,700 sq.ft. GFA, providing 148 licensed beds, and commands a monthly passing rent of HK$835,000, or HK$34/sq.ft., representing a remarkable 8.5% yield on passing income. Similar transactions happened this year provide a yield ranges from 7.0% to 8.6%:-
Comparable Transactions Summary (2025 YTD)
Key Observations from Recent Transactions
- Across these transactions, rent as a percentage of bed income ranges between 32% and 45%, indicating a healthy cost-to-income structure for operators.
- When evaluating RCHE investments, investors should assess the profitability of the operator, benchmark the current lease against market rent, and examine the potential for rental reversion upon lease expiry.
- RCHEs under the EBPS scheme often benefit from higher occupancy and government-backed income, reducing the risk of lease termination and enhancing investment stability.
4. Compliance in terms of Lands / Planning and Building Regulations
Investing in RCHEs requires careful consideration of statutory and regulatory compliance—particularly under Cap. 459 (Residential Care Homes (Elderly Persons) Ordinance). To mitigate legal and operational risks, investors should undertake thorough due diligence in the following key compliance areas:
Other than the above, investor should conduct a thoughtful reputation check on the tenant, he or she could make a search on warning record & conviction record for RCHEs to examine whether there is potential risks of termination on license. Alternative operators / tenants should be identified if significant compliance or reputation risks are identified.
Outlook of the Sector
Against the backdrop of aging population (research projected to see one in four residents aged 65 or above by 2031), It is expect the demand for RCHEs is set the rise steadily. However, it is expected the cost for compliance, building upgrade and shortage of labour may result in increase of overhead cost and compress profit margins of the business.
Despite the above concerns, the sector remains resilient. Government support through schemes such as the EBPS and the Residential Care Service Voucher Scheme provides indexed subsidies, offering a degree of income stability. As a result, RCHE investments are considered defensive and counter-cyclical, making them particularly attractive to yield-focused and long-term investors. Additionally, investors with existing healthcare portfolios may find strategic synergies and cross-selling opportunities within this space.
CBRE’s Value Proposition
While the RCHE sector offers promising returns, it also requires careful navigation of regulatory, financial, and operational complexities. At CBRE, we help investors mitigate risks and unlock value through a comprehensive suite of advisory services, including: -
Investing in RCHEs requires careful consideration of statutory and regulatory compliance—particularly under Cap. 459 (Residential Care Homes (Elderly Persons) Ordinance). To mitigate legal and operational risks, investors should undertake thorough due diligence in the following key compliance areas:
Other than the above, investor should conduct a thoughtful reputation check on the tenant, he or she could make a search on warning record & conviction record for RCHEs to examine whether there is potential risks of termination on license. Alternative operators / tenants should be identified if significant compliance or reputation risks are identified.
Outlook of the Sector
Against the backdrop of aging population (research projected to see one in four residents aged 65 or above by 2031), It is expect the demand for RCHEs is set the rise steadily. However, it is expected the cost for compliance, building upgrade and shortage of labour may result in increase of overhead cost and compress profit margins of the business.
Despite the above concerns, the sector remains resilient. Government support through schemes such as the EBPS and the Residential Care Service Voucher Scheme provides indexed subsidies, offering a degree of income stability. As a result, RCHE investments are considered defensive and counter-cyclical, making them particularly attractive to yield-focused and long-term investors. Additionally, investors with existing healthcare portfolios may find strategic synergies and cross-selling opportunities within this space.
CBRE’s Value Proposition
While the RCHE sector offers promising returns, it also requires careful navigation of regulatory, financial, and operational complexities. At CBRE, we help investors mitigate risks and unlock value through a comprehensive suite of advisory services, including: -
- Feasibility Studies & Market Research – In-depth analysis to assess demand, competition, and location viability.
- Deal Structuring & Financial Modelling – Tailored investment strategies and financial projections to support decision-making.
- Valuation Services – Accurate assessments for acquisition, financing, exit planning, or rent review.
- Zoning, DMC & Land Use Due Diligence – Expert guidance on regulatory compliance and land use constraints.
Final Thoughts
As Hong Kong’s elderly care sector evolves, it presents a rare blend of social impact and investment potential. With the right insights and strategic approach, investors can tap into a resilient, high yield asset class.
CBRE stands ready to support your journey with market intelligence, technical expertise, and end-to-end advisory services tailored to your investment goals.