CapitaLand Investment to buy Hong Kong hotel for HKD2.3 billion, convert to student housing
CapitaLand Investment plans to acquire the 550-room Ibis Hong Kong Central & Sheung Wan hotel for about HKD2.3 billion and convert it into student accommodation. The deal is among HKD8.2 billion in hotel transactions this year, with many properties being repurposed as Hong Kong faces a shortage of o
Singapore-based CapitaLand Investment plans to acquire the 550-room Ibis Hong Kong Central & Sheung Wan hotel for about HKD2.3 billion (US$1.05 billion) and convert it into student housing, according to Caixin Global. Property consultant Colliers said this marks one of the largest recent investments in the city's growing purpose-built student accommodation sector.
Among HKD8.2 billion in hotel property transactions involving about 2,550 rooms so far this year, most involved conversions into student accommodation, with some incorporating a hybrid of hotel and co-living offerings, Colliers reported. Other notable deals include the acquisition of Silka Seaview (268 rooms) and 218 Apartment Wan Chai (59 rooms) by JD.com for a total of HKD1.03 billion to develop student housing.
These deals signal a shift in Hong Kong's hospitality property market. The city consistently ranked as the world's most-visited city before 2019, according to consultancy Euromonitor International. Hong Kong recorded 29.26 million overnight visitor arrivals in 2018, while the average hotel occupancy rate rose by 2 percentage points to 91 per cent that year, according to the Tourism Commission. Last year, overnight visitor arrivals totalled 23.19 million, still 20 per cent below the 2018 peak, with average hotel room occupancy at 87 per cent.
With financing costs rising due to higher interest rates, many hotel owners have found the hospitality business challenging. Recent cases have shown that owners unable to service their debts had to dispose of their assets, either by selling them at huge discounts or having creditors liquidate the assets, the South China Morning Post reported.
As the government seeks to establish Hong Kong as a global education hub, property consultancy JLL estimated that the city would face a shortage of more than 140,000 student beds by the 2029-2030 school year. Higher-end hotels could attract more capital to refresh and upgrade their amenities, while well-priced midscale properties could be suitable for conversion into student accommodation, said Shaman Chellaram, senior director for hotel advisory and valuation and advisory services at Colliers.
Location could determine whether a hotel was better suited for conversion into student housing or continued use as tourist accommodation, said Cleavon Tan, senior vice-president of hotels and hospitality group at JLL Hong Kong. "Hotels in established tourism and business districts, with strong demand drivers, can offer a compelling case for continued hotel use and further investment. For properties outside these core locations, particularly where hotel performance is weaker but access to universities and public transport is good, student accommodation may offer a more attractive use," Tan said.
