Hong Kong’s bid to be an international education hub is spurring investments in the city’s battered commercial property segment, with hotels being converted to student housing and schools becoming a major driver of leasing in the retail sector, according to analysts.
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So far this year, investors have spent HK$2.6 billion (US$334 million) in the student accommodation segment, including Hong Kong Metropolitan University’s acquisition of the Urbanwood Hung Hom Hotel, which was converted into student accommodation, while City University of Hong Kong transformed the retail podium at Inter-Continental Plaza in Tsim Sha Tsui into an academic space, according to Colliers.
“Education is increasingly shaping both leasing and investment activity,” said Kathy Lee, head of retail and research consultancy at Colliers. “Leasing demand is rising as schools expand into retail podiums and office floors, with DSS (direct subsidy scheme) schools expanding and institutions repurposing commercial assets for use as classrooms, labs, faculty offices and student housing.”
The demand and interest coming from the education segment is bringing some relief to Hong Kong’s struggling commercial real estate sector.
The city’s commercial landlords are dealing with high vacancy rates in both the office and retail segments, putting pressure on rents.
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