Hong Kong student housing deficit could reach 137,000 beds by 2028/29: Knight Frank

Over 15 hotel assets have either been converted or earmarked for redevelopment as hotel-to-student-accommodation conversions.

Hong Kong's student accommodation market is emerging as one of the territory's most compelling alternative real estate sectors, underpinned by rapidly rising international student numbers, a widening supply shortfall and growing institutional investment, according to Knight Frank.

In its latest report on the future of student living in Hong Kong, Knight Frank said coordinated efforts by universities to expand teaching capacity, coupled with more accommodative post-graduation employment policies for non-local students, have significantly strengthened the city's appeal as an education destination. As a result, non-local student enrolment has grown at an estimated compound annual growth rate of about 23% over the past five years.

Knight Frank projects the number of non-local students will reach 166,000 by the 2028/29 academic year, based on current government policies, including capped government-funded programmes and annual growth of around 15% in self-financing enrolments.

However, the consultancy said the supply of student accommodation remains severely constrained. Because university-operated dormitories are partly reserved for local students, Hong Kong faces an estimated shortfall of about 82,000 student beds in the 2025/26 academic year. Despite planned university developments and private-sector conversion projects, Knight Frank expects the deficit to widen further to around 137,000 beds by 2028/29.

Knight Frank said the supply-demand imbalance has fuelled rising institutional interest in the sector. Following the city's first hotel-to-student accommodation conversion in Hung Hom in 2022, which Knight Frank facilitated, more than 15 hotels have since been converted or earmarked for conversion, adding more than 5,000 student beds.

According to Knight Frank, three- and four-star hotels have been the preferred acquisition targets due to their relatively attractive pricing, suitable building layouts and lower conversion costs. These characteristics have enabled investors to reposition underutilised hospitality assets into income-generating student accommodation with comparatively modest capital expenditure.

The consultancy noted that both international investors and local developers have entered the market. Among the notable projects are Y.X, backed by Crystal Investment through a partnership with AEW Capital, and Sunny House, developed through a collaboration between Wang On Properties and Angelo Gordon, which is currently Hong Kong's largest private student accommodation asset. Traditional residential developers have also entered the sector, with Henderson Land leasing an entire residential property to The Chinese University of Hong Kong under a master lease, while Easyknit has partnered with iRent to convert a residential building into student accommodation.

Knight Frank said government support has further accelerated market activity. The "Hostel in the City" scheme, introduced in July 2025, allows faster conversion of commercial buildings through planning flexibility and regulatory relaxations. Since its launch, more than 25 commercial properties have applied for conversion, representing a potential pipeline of over 5,000 additional student beds in the medium term.

With most suitable hotel assets already absorbed, Knight Frank said investors are increasingly turning their attention to underutilised office buildings, particularly those with retail podiums that offer greater flexibility for reconfiguration and enhanced amenities.

Looking ahead, Knight Frank expects Hong Kong's student accommodation sector to become increasingly institutionalised, although it remains at an earlier stage of development than more mature markets such as the United Kingdom and Australia. The consultancy believes institutional funds seeking stable, defensive income streams will continue increasing allocations to stabilised student housing assets, while local developers are likely to view the sector as an attractive avenue to diversify beyond traditional residential development.

Knight Frank concluded that the territory's structural undersupply, supported by sustained demand from tertiary institutions and international students, will continue to underpin student accommodation as one of Hong Kong's most attractive opportunities for yield enhancement and asset repositioning.