Centaline Buys $194M Kowloon Hotel From Regal REIT for Student Housing Fund

The investment arm of one of Hong Kong’s largest property agencies has made its biggest bet yet on the city’s future as a cross-border education hub, picking up a Kowloon hotel from HKEX-listed Regal REIT for HK$1.5 billion ($194 million).

Centaline Investment is acquiring the Regal Oriental Hotel in Kowloon City to serve demand from growing numbers of students needing accommodation in the area and plans to spend up to HK$2 billion on the project, including converting the property for student housing use, according to company representatives.

The 494-room property is the third hospitality asset which Centaline has acquired on behalf of a student housing strategy which it announced last year, with Kavis Ip, CEO of Centaline Investment Management, pointing to growing demand for Hong Kong student housing opportunities.

“We see a compelling window to scale in Hong Kong’s student housing market,” said Kavis Ip, chief executive of Centaline Investment Management, citing rising student demand and a period of asset price adjustment as key drivers of the acquisition.

The manager of Regal REIT, which is sponsored by Hong Kong’s Regal Hotels International, said in a statement announcing the sale to the Hong Kong exchange that the disposal would reduce the trust’s gearing ratio and lower interest expenses. The REIT is booking a HK$151 million loss on the sale.

6,000-Bed Target

With completion of the hotel purchase expected to take place by 30 April, Centaline plans to open the first phase of the hostel in September under its CampusOne Communities platform.

The 17-storey building spans 229,067 square feet (21,281 square metres) of gross floor area and sits within an 8-minute walk from both Sung Wong Toi and Kai Tak MTR stations, close to several major universities including Hong Kong Polytechnic University, City University of Hong Kong and Hong Kong Baptist University.

Centaline’s purchase comes as Hong Kong considers further raising the cap on non-local students at public universities, after boosting the quota from 20 percent to 40 percent for 2024–25, and again to 50 percent for 2026–27.

Having announced its student housing fund in May last year with a 2,000-bed goal, Centaline said it has raised its target to 6,000 beds within two to three years. Ip said the company is in active discussions with institutional investors including sovereign funds and private equity firms regarding co-investment in the platform.

The Regal Oriental deal marks Centaline’s third acquisition of a hospitality property for conversion to student housing under its CampusOne Communities platform, which it inaugurated after acquiring the Popway Hotel in Tsim Sha Tsui in 2024.

In November last year the company acquired Bonham Residence in Sai Ying Pun for HK$335 million, with plans to convert that tower near the University of Hong Kong campus into a further 170 to 200 beds.

Regal REIT Lowers Leverage

Regal REIT, which currently has a portfolio of nine Hong Kong hotels under the Regal and Iclub brands is selling the property at 30-38 Sa Po Road after posting a HK$508 million loss for the first half of 2025.

The trust, which must report its 2025 results by 30 March, had suspended its dividend for the first half of 2025. Regal REIT’s manager said net proceeds of HK$743 million from the transaction will go towards repaying bank borrowings and funding working capital.

The Regal Oriental Hotel, completed in 1982, was among five initial assets injected into the REIT at its 2007 listing.

Student Housing on the Rise

Centaline’s pursuit of student housing opportunities aligns with what has become a mainstream strategy in Hong Kong as institutional investors bet on the city’s growing appeal as an education destination. 

State-owned mainland giant China Resources Longdation agreed earlier this month to acquire the Hotel Cozi Oasis in Kwai Chung from Stan Group for HK$953 million, with plans to convert the 583-room property into student accommodation.

That Kowloon deal came after China Merchants Commercial REIT in January completed the purchase of the Austin Avenue Hotel in Tsim Sha Tsui for HK$205.9 million.

Last August, a fund managed by US alternative asset manager TPG Angelo Gordon teamed up with Hong Kong-listed developer Wang On Properties to purchase Hotel Ease Mong Kok for approximately HK$435 million for conversion to student housing.