Alternatives
Purpose Built Student Housing
Investing in Urban Hospitality: Unlocking Opportunities through Student Housing Conversion
CBRE’s integrated, one-stop solutions guide you through every stage of your project, helping you realize your full potential and maximize value.
Why Should Office Landlords Consider Exploring Student Housing Conversion?
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High Vacancy Risk
Downward pressure on rents and elevated vacancy rates for offices in Hong Kong
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Rental Challenges
Tier 2 locations where renovation strategies may not deliver significant rental uplift
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Conversion Solutions
Government incentives under the Hostels in the City Scheme enable office landlords to convert empty spaces into student housing for better income stability
Key Differences Between Office and Student Housing Assets from an Investment Perspective
| Nature | Office | Student Housing |
| Cashflow profile | Higher credit loss |
Typically able to secure 12 months cashflow from students upfront |
| City-wise occupancy | 83%; projected to face even more severe pressure in 2026 to 81%, upon completion of new pipelines | >90% for most stabilised players |
| Rental reversion | 2026 projection to be -5% | 2026 projection to be +5 to +8% |
| Financing difficulties | More stringent covenants and terms of financing | Banks are more optimistic towards the sector and are more willing to provide a better loan term |
| Income nature | More cyclical | Anti-cyclical |
| Summary | The market will continue to face medium-term pressure over the next few years, with segments commanding rents of around HK$20–30 per sq. ft. expected to suffer the most | Defensive with growth potential |
Against the backdrop of the projected outlook for the office market in the coming years, student accommodations presents an interesting repositioning opportunity that could address current pain points in office buildings. The underlying fundamentals also appear sound and more appealing over the medium term.
Nevertheless, not every office building is suitable for potential conversion. Based on our hands-on experience, there are several key indicators that suggest a building may be a good candidate for conversion:
Investment Rationales
Indicators that Your Building May Be Advantageous for Potential Conversion
The Step-by-step CBRE Approach
The Step-by-step CBRE Approach
Typical Project Timeline under the Hostels in the City Scheme
Typical Project Timeline under the Hostels in the City Scheme
Successful Student Housing-related Transactions
Hotel Ease Mong Kok
Portland Street, Mongkok
8,595 sq. ft.
HK$432MBonham Residence Hong Kong
38C Bonham Road, Mid-Levels
36,660 sq. ft.
HK$335MThe Henry
322-324 Des Voeux Road West, Western District
23,881 sq. ft.
HK$183MKum Lam Building
98-104 Reclamation Road, Yau Ma Tei
23,254 sq. ft.
HK$108M56-58 Junction Road
Kowloon City
11,628 sq. ft.
HK$60.5M74-76 Fa Yuen Street
Mongkok
11,277 sq. ft.
HK$60.3M92 Hak Po Street
Mongkok
7,183 sq. ft.
HK$53.4M
Related Insights
- Valuer Insights
Business Insights | How Student Hostels Conversion Projects Can Qualify as Social Loans
October 20, 2025
By
This article explores how student housing conversions qualify under the SLP, their benefits for investors, and sustainability considerations in renovation and leasing.
- Valuer Insights
Business Insights | Hong Kong’s Hostels in the City Scheme: A Strategic Push for Student Housing and Urban Revitalization
August 4, 2025
By
To address the growing demand for student accommodation and revitalize underutilized commercial properties, the Hong Kong SAR Government started to accept applications for the Hostels in the City Scheme (“Scheme”) in July 2025.
Hong Kong has implemented various strategies to attract overseas talent and students to the city.
The demand growth of Hong Kong’s student housing has prompted investors to consider converting hotels or residential buildings into dormitories. The article compares both options, highlighting hotels’ operational flexibility, unified ownership and amenity space, versus residential units’ resale advantages. It also examines students’ priorities and outlines strategic considerations for positioning student accommodation in a growing investment segment.
Recent Appearances
Mainland Chinese hotel operators are expected to significantly increase their presence in Hong Kong’s hotel industry, potentially replacing established brands in the coming years.
CBRE’s Hannah Jeong notes that Hong Kong’s hotel room rates fell by 10% after the pandemic, spurring a trend toward converting properties into student housing.
Reeves Yan, Head of Capital Markets at CBRE Hong Kong, shares insights on investment opportunities, including costs and potential returns.
CBRE’s Jonathan Chau notes that local investors and funds are re-entering the market, signaling a potential rebound in Hong Kong’s real estate sector. He emphasizes that, attracted by their resilience, investments in student housing are drawing significant capital inflows.
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