Million Group leases M1 Yau Ma Tei Hotel for over $900,000 monthly as student accommodation 

The Million Group has leased its entire M1 Yau Ma Tei Hotel to a student hostel operator for over HK$900,000 per month following the sale of its M1 North Point Hotel for HK$183 million, which will also be converted into student accommodation.

The hotel, located at 28-32 Portland Street in Mong Kok, is a 27-story building with a ground-floor lobby and a trendy Western restaurant on the first floor. 

Guest rooms are located above the fifth floor, with a total gross floor area of around 24,729 square feet and 93 guest rooms. All rooms are rented out for over HK$900,000, averaging around HK$10,000 per room. 

The operator, established in 2018, targets the high-end segment and enjoys a strong market reputation. The property will be transformed into 93 student hostel units. With July marking the peak rental season for student accommodation, the operator will take possession in May for renovations to ensure readiness.

The first-floor restaurant currently generates over HK$100,000 in monthly rent. Together with the hotel rooms, the building now produces more than HK$1 million in total monthly rental income. 

Last year, Million Group offered the property for sale at around HK$230 million. Based on current rental levels, the yield exceeds five percent. Its prime location, just a two-minute walk from Yau Ma Tei MTR Station and close to Nathan Road, adds to its appeal.

Separately, the group recently sold the M1 Hotel at 112 Chun Yeung Street in North Point for HK$183 million. That 30,244-square-foot property with 92 rooms fetched about HK$6,051 per square foot, or roughly HK$1.99 million per room. 

The local investor buyer intends to convert it into student accommodation and begin rentals before the new academic semester in May.

Daniel Mok, Senior Director of Capital Markets at CBRE Hong Kong, noted that the buyer is exploring partnerships with student hostel operators, apartment brands, hotel operators, or post-secondary institutions. 

He expressed confidence that the revamped property will be ready for pre-leasing and student occupancy in fresh condition ahead of the upcoming term.

The hotel was first listed for sale in June last year for about HK$232 million. Originally purchased for HK$305 million in 2014, the group exited after about 12 years with a book loss of approximately 40 percent, or HK$120 million. However, over 11 years of rental income exceeded HK$150 million, fully offsetting the price difference. 

While Hong Kong’s student hostel sector remains robust, some operators have exited. 

For example, BeLIVING Youth Hub on Morrison Hill Road in Causeway Bay, converted from a hotel by Gale Well Group and run by the Hong Kong United Youth Association under government subsidy, will cease operations after less than three years, requiring over 100 young tenants to vacate by late March.