Centaline eyes budding student dorm market

Centaline Property is planning to invest in a student apartment project that will provide 2,000 beds over the next two to three years as more and more mainlanders study in the city, says chairman Shih Wing-ching.

The investment is expected to involve billions of dollars.

Centaline is optimistic about the strong demand due to a shortage of beds in the student apartment market, and a stable investment return amid the city's pledge to expand quotas for nonlocal students at public universities, Shih said in a group interview.

The company is now searching for suitable dormitory projects near universities, Shih added.

Home to five of the world's top 100 universities, Hong Kong is stepping up to become a global education hub by attracting talent, with the government proposing to double the quota for nonlocal students at eight public universities to 40 percent last year.

The number of foreign students coming to Hong Kong for further studies has continued to grow, with a cumulative increase of 35.5 percent over the past four years, a survey by Centaline shows.

A Jones Lang LaSalle report released in March expects the influx of nonlocal students and the insufficient supply of dormitories to create a demand for 22,300 beds in the private market by 2027.

AEW Capital Management acquired Hotel Sav in Hung Hom for HK$1.65 billion and turned it into a student hostel called Y83 in early 2022.

The monthly rent in Y83, which can accommodate up to 600 students, rose to HK$14,800 from HK$8,100, according to JLL's report. It posted an annual growth rate of over 10 percent between 2022 and 2024, the report added.

Student accommodation has been a hot sector for institutional investors over the past 12 to 18 months, with en-bloc hotels or apartment blocks for student accommodation conversion being acquired, said Reeves Yan, head of capital markets at CBRE Hong Kong.

Centaline has overseas experience in the sector.

It spent US$16 million (HK$124.8 million) last month to acquire a student apartment project in Georgia in the United States.

The project involves 32 properties providing about 148 beds, all of which are leased out.

More learning, sports, and recreational facilities will be added, as well as the provision of furniture rental services, the firm said.

The company is also planning to invest US$25 million to acquire a project in North Carolina.

Samuel Chan Sze-ming, managing director of Hong Kong-based education consultancy Britannia StudyLink, told The Standard that student dormitories developed by property companies are common in countries where Hongkongers tend to study, such as the United Kingdom and Australia.

"In the UK, it's guaranteed for nonlocal students to live at dorms on campus during their first year. But there is no guarantee in the following years," he said. "So both local and HK companies are building dormitories for them."

As the city undergoes an economic transition and sells education services, he said providing safe accommodation for nonlocal students would further enhance the city's competitiveness.

An education agent in Hong Kong, Zhou Wanhui, said private student dormitories will be popular among mainland students as they are convenient and safe with a flexible lease.