Experts see student housing boost from ‘Hostel in the City’

JLL said the policy is a step in the right direction, but warned it may not be attractive enough in the near term.

Property and real estate experts have broadly welcomed the government’s decision to expand the “Hostel in the City” scheme to cover both development and redevelopment projects.

Experts said it could help ease pressure on Hong Kong’s student housing market and make better use of underperforming commercial space, though some cautioned that current market conditions may limit investor appetite.

Kathy Lee, Head of Research and Retail Consultancy at Colliers, noted the move could also unlock underutilised Grade B and C office space, supporting urban regeneration and revitalisation. 

Meanwhile, Marcos Chan, CBRE Hong Kong’s Head of Research, said allowing commercial building redevelopment under the scheme could enhance long-term supply, help absorb vacancy in lower-tier office stock, and let owners benefit from the higher plot ratios permitted.

Hannah Jeong, CBRE’s Head of Valuation and Advisory Services, added that the change could translate into a shortfall of about 73,000 beds by 2027–28 if every non-local student seeks housing.

She noted the scheme has already prompted conversions of four hotels and three residential buildings into student accommodation this year and said more hotel conversions are likely.

JLL took a more cautious stance. Its Hong Kong chairman Joseph Tsang said the policy is a step in the right direction, but warned it may not be attractive enough in the near term given the economic downturn, weak property market and tighter bank lending.

He said developers may hesitate to demolish and rebuild due to the loss of rental income and financing challenges, and suggested that converting existing commercial buildings may be a more viable and cost-effective approach than full redevelopment.