Regal’s US$194m hotel sale reflects investor push into Hong Kong student housing

Regal Hotels International Holdings and its units have sold the 494-room Regal Kowloon Hotel for about HK$1.52 billion (US$194 million) to the real estate investment arm of Centaline Group, which operates one of Hong Kong’s largest property agency networks, to be converted into a student hostel. Regal Hotels and affiliates Century City International Holdings and Paliburg Holdings agreed to dispose of the 17-storey hotel on Sa Po Road, including two basement floors, the group said in a filing with the Hong Kong stock exchange on Monday. The buyer was identified as Blue Sky Properties, a Hong Kong-based unit of Centaline Strategic Investments. The purchase amount was about 7.8 per cent lower than the appraised value of HK$1.65 billion at the end of 2025. The sale also included HK$753 million of debt tied to the asset, which would be assumed by the buyer, the filing said. The property would be rebranded under Centaline’s student accommodation platform CampusOne Communities, the company said in a separate statement. The deal highlights investors’ appetite for student accommodation in Hong Kong, where consultancy Savills estimated a deficit of about 88,000 beds. Savills said the government’s Hostel in the City Scheme had received 25 applications involving 5,100 beds, of which 23 were commercial conversions and two newly built projects. “The acquisition reflects both market timing and conviction,” said Kavis Ip, CEO of Centaline Investment. “With student demand continuing to rise structurally and sitting at a stage of asset price adjustment, we see a compelling window to scale in Hong Kong’s student housing market.” Ip added that the latest acquisition would increase the group’s investment in the segment to more than HK$2 billion as it targeted raising its bed count to 6,000 in two to three years. “Student housing is no longer a niche segment – it is becoming essential infrastructure for a global education hub like Hong Kong, and it is growing into an institutional-grade investment asset,” said Josephine Kong, managing director and chief investment officer of the company. In August, Centaline announced a HK$335 million purchase of the serviced apartment complex Bonham Residence, with 96 units, to be converted into about 200 student beds. The property in Sai Ying Pun is within walking distance of the University of Hong Kong. Recently, the owners of Rich China Center, a grade B building in Kwun Tong, applied to the Town Planning Board to convert the asset into a student hostel, offering 117 rooms with a total of 225 beds, Savills said. Earlier this month, a subsidiary of state-owned conglomerate China Resources (Holdings) acquired four-star hotel Hotel Cozi Oasis in Kwai Chung, a major industrial and residential area in the southwestern New Territories, for HK$953 million. The firm, whose operations range from asset management to retail and hotel operations, plans to turn the property into student housing with about 900 beds. “Although the government has introduced the Hostels in the City Scheme to encourage the market to convert commercial buildings, including offices and hotels, into student hostels, hotels have been best received due to higher compatibility and lower conversion costs,” said Martin Wong, director and East Asia asset management leader at UK multinational firm Arup. “As there is still a large demand gap for student hostel beds in the market, we expect more investors and operators to tap into student hotels in the coming two to three years.”