Family of Hong Kong’s Late Minibus King Marketing Budget Hotel as Student Housing Play

The family of Hong Kong’s late “Minibus King” Ma Ah-muk has put up for sale a 93-key hotel in the city’s Sai Ying Pun area, with brokers marketing the budget hostelry for conversion to student housing.

With Ma having built a fortune after founding Hong Kong’s largest operator of minibus routes in the 1970s, his heirs have appointed CBRE to manage a tender for the Eco Tree Hotel at 160 Des Voeux Road West, with local media reports indicating the asset to be worth HK$588 million ($75 million), or around HK$8,890 per square foot.

Following some recent acquisitions of Hong Kong hotels for conversion to student housing, CBRE pointed to the property’s location one stop from the University of Hong Kong (HKU) MTR station as potentially appealing to investors.

“In recent years, the property investment market has shown enthusiastic responses for student housing conversion opportunities,” Zac Wong, director of capital markets at CBRE Hong Kong said in a release. “It shows that the student accommodation demand is strong and it has become one of the most popular sectors in the property investment market. Eco Tree Hotel Hong Kong is a rare opportunity as it is located in the traditional core area of Hong Kong Island and close to HKU.”

Victoria Harbour Views

Located adjacent to an entrance to the Sai Ying Pun MTR station near the intersection with Eastern Street, the Des Voeux Road West property was converted into a hotel in 2015 and has a gross floor area of around 66,144 square feet (6,145 square metres).

The 24-storey building includes a commercial podium with restaurants and spas occupying the ground floor through fourth floor and office space on levels 5 and 6, with the hotel’s lobby situated on the seventh floor.

“The most significant highlight of this property is its flexibility for conversion into student housing,” said Reeves Yan, head of capital markets at CBRE Hong Kong. “With the continuous rise in residential rents in the surrounding areas, converting the property into student apartments is expected to bring considerable returns.” The tender concludes at noon on 26 September.

Asset Sales

Guangdong-born Ma, who died in March at age 96, had amassed a portfolio of commercial properties estimated in 2018 to be worth $3.8 billion, including a high profile purchase in late 2017 of a set of 13 floors in The Center, a 73-storey office tower located between the Central and Sheung Wan districts which ranks as Hong Kong’s fifth tallest building.

Ma had been part of a consortium of mainland and Hong Kong investors who paid a record HK$40.2 billion ($5.2 billion) to acquire a 75 percent stake in the building from tycoon Li Ka-Shing’s CK Asset in what was then Asia’s largest single-asset property transaction, with the investors having financed the purchase with bonds yielding as much as 15.25 percent.

The transport tycoon’s 27.4 percent interest in the skyscraper represented the largest stake among the consortium, which included Shimao Group chairman Xu Rongmao, Hong Kong businesswoman Pollyanna Chu, Hong Kong’s “King of Cassettes” David Chan Ping-chi, and other investors, who planned to flip the tower piecemeal to eager buyers through strata sales.

Ma began liquidating assets in late 2019 as political unrest triggered a slump in Hong Kong’s commercial property market that worsened through the pandemic, with capital values of grade A offices having plummeted 41.6 percent from 2019 peaks through 30 June, according to JLL. In 2021, Ma sold the 20th floor at The Center to a family member of former Hong Kong chief executive Tung Chee-Hwa for around 24 percent less than he had paid to acquire the asset four years earlier.

Other asset sales by Ma and his family since 2020 include a Tsim Sha Tsui commercial building, a Kwun Tong industrial block, a floor in the China Merchants Building of the Shun Tak Center in Sheung Wan, as well as various street shops and car parks across the city.

Ma’s portfolio also includes the Ka Fuk Shopping Centre in Fanling, the Shek Yam Shopping Centre in Kwai Chung, and the Kwai Hing Shopping Centre in Kwai Chung, which were acquired from HKEX-listed Link REIT, as well as a residential and commercial block at 60-62 Yee Wo Street in Causeway Bay.

Student Influx

The Eco Tree Hotel is hitting the market after the number of full time mainland Chinese students studying in Hong Kong reached 16,179 in the 2022-2023 academic year, representing a 31.5 percent increase from 2018-2019, according to statistics from Hong Kong’s University Grants Committee, which allocates funding to the city’s eight major public universities.

In October, Hong Kong chief executive John Lee doubled the admission quota for non-local students, including mainlanders, from 20 percent to 40 percent. JLL estimates the number of non-local students opting for private accommodation in Hong Kong will reach 59,500 by the 2027-2028 academic year, resulting in a shortage of 22,300 beds.

“Coupled with the continuous shortage of local university dormitory supply and the significant increase in the number of non-local students, rents are expected to rise further,” said Yan. “These have made student accommodation investment a popular choice in the property investment market in recent years.”

Earlier this month, local developer Crystal Investment acquired the Incredible Residences commercial and residential block in Hung Hom for HK$123 million, with plans to convert the asset to a student housing project. Crystal had teamed up with Boston-based fund manager AEW Capital Management in 2021 to buy the 388-key Hotel Sav in Hung Hom for HK$1.65 billion ($210 million), with that property rebranded as the Y83 facility operated by Crystal’s student housing asset management platform Y.X.

Last month, an entity linked to Centaline Property Agency founder Shih Wing-ching bought the 63-key Popway Hotel in Tsim Sha Tsui for a reported HK$180 million, with the project potentially able to provide 130 to 150 beds upon conversion. Centaline Investment, the property investing arm of Centaline Group, is planning to invest in approximately 2,000 student beds in Hong Kong over the next two to three years in anticipation of growing demand for student accommodation.

That deal came a month after Hong Kong Metropolitan University acquired the 255-key Urbanwood hotel in Hung Hom from the Law family behind local developer Yu Tai Hing for use as student housing to accommodate the university’s growing student population. Market sources indicating the asset changed hands at a price of roughly HK$1 billion ($128 million).

In 2022, local developer Wang On Properties and US private equity firm Angelo Gordon acquired the 695-key Pentahotel in Kowloon East from New World Development for HK$2 billion ($260 million), with the property having been converted to a student housing facility operated under Wang On’s Sunny House co-living brand.