The Rise of Student Housing Investment in Hong Kong: Centaline’s Bonham Residence Acquisition
Centaline Investment has made a significant move in Hong Kong’s real estate market with its recent acquisition of Bonham Residence, a 96-key serviced apartment complex located just a stone’s throw away from the University of Hong Kong (HKU). The acquisition comes with a price tag of HK$335 million (approximately $43.1 million), a savvy investment considering the burgeoning demand for student housing fueled by an influx of non-local students.
A Strategic Investment in Student Housing
The decision to transform Bonham Residence into dedicated student housing reflects Centaline’s strategy to tap into a rapidly growing market segment. According to Centaline CEO Kavis Ip, student housing is an “inherently resilient and high-growth segment” that presents an opportunity for stable returns—especially important in today’s volatile economic climate. The firm plans to invest an additional HK$65 million to convert the structure for student use, with an anticipated opening in September next year.
Prime Location and Accessibility
One of the most appealing aspects of Bonham Residence is its prime location. Situated about a four-minute walk from an entrance to HKU and close to the Sai Ying Pun MTR station, the property will cater to a demographic that values convenience and ease of access. The conversion aims to increase the housing capacity to between 170 and 200 beds, all managed under Centaline’s CampusOne Communities brand.
Financial Details of the Acquisition
Centaline’s acquisition price translates to approximately HK$3.49 million per key, achieved with a 16.3 percent discount from the original asking price of HK$400 million. The building, dating back to 1998, offers room for expansion in terms of community facilities and amenities. Centaline aims to create communal spaces, study environments, and recreational areas to enrich the living experience for students, which can significantly impact academic performance and social interaction.
Growing Demand from Non-Local Students
The demand for student housing in Hong Kong is expected to escalate further, thanks to recent governmental policy changes. In September, the Hong Kong government announced an increase in the cap for non-local students at public universities from 40 percent to 50 percent. This follows a previous increase from 20 percent to 40 percent just a year earlier, showing a commitment to welcoming more international talent. With these changes, Centaline anticipates strong market demand for the Bonham Residence, thus solidifying its investment.
Future Plans for Expansion
Centaline’s ambitions extend beyond this single acquisition. The company has outlined plans to establish a portfolio of 3,000 student housing beds in Hong Kong. This is part of a broader strategy to create community-oriented living spaces aimed at accommodating the influx of international students. Already, the company operates successful student housing funds in the United States and the United Kingdom, and it intends to introduce a similar model in Hong Kong.
Collaborative Investment Approach
Centaline is also exploring partnerships with global funds and limited partners to co-invest in student housing projects. This collaborative approach is designed to maximize opportunities and leverage resources as they aim to meet growing demand. Kavis Ip mentioned that the new fund focused on Hong Kong is currently underway, suggesting a robust pipeline of future developments.
Market Competition
As the landscape of student accommodation grows, Centaline Investment isn’t alone in its pursuit of this lucrative segment. Other investors are scrambling to establish their foothold. For instance, TPG Angelo Gordon recently formed a partnership with local developer Wang On Properties to convert Hotel Ease Mong Kok into student housing, which highlights the competitive environment vying for a share of this burgeoning market.
Conclusion
In summary, Centaline Investment’s acquisition of Bonham Residence is a reflection of the shifting dynamics of Hong Kong’s real estate market, particularly in the burgeoning sector of student housing. With rising demand from non-local students, strategic location, and the firm’s vision for community-driven living, Bonham Residence is poised to play a pivotal role in addressing this growing need.