Hong Kong’s Crystal Investment Acquires Kowloon Buildings for Student Housing

A unit of Hong Kong-based property developer and investor Crystal Investment has acquired a pair of buildings in Kowloon for student housing use, as the growing influx of mainland Chinese students boosts demand for private accommodation in the Asian financial centre.

Crystal’s YX asset management subsidiary has completed the separate acquisitions of the Incredible Residences residential and commercial building in Hung Hom and the Hotel Ease Access – Lai Chi Kok in Cheung Sha Wan for a combined HK$343 million ($44 million) with both properties set to be operated as student housing facilities under the YX platform.

“We are pleased to have completed these two important acquisitions in a short period of time,” Crystal Investment CIO Andrew Chan said in a release. “We remain optimistic towards the development of the private student accommodation market in Hong Kong, as well as the growing demand for accommodation driven by the increasing number of non-local students in Hong Kong in recent years.”

Crystal is expanding its student housing portfolio as property consultancy Colliers projects a 122,000 student bed shortfall by 2028, after the number of non-locals studying in Hong Kong grew at a compound annual growth rate of 11.6 percent from 2018 to 2023, with mainland China accounting for some 80 percent of that total in the 2023-2024 academic year, according to a report this week by the consultancy.

Two Acquisitions in Three Months

YX, which Crystal bills as the largest private student accommodation operator in Hong Kong, acquired the 25-storey Incredible Residences building last month for HK$123 million (HK$5,151 per square foot), with the 23,878 square foot property having been rebranded as the Y36 facility.

Situated within a seven minute walk of the To Kwa Wan and Ho Man Tin MTR stations at 3 San Lau Street in Hung Hom, Y36 has 82 beds across 61 single and twin rooms. The property also has over 4,000 square feet of communal space and shared facilities, including kitchen, laundry, work space and study areas, as well as common rooms, a gym and an outdoor terrace.

The property was completed in 2020 at a reported development cost of HK$400 million to HK$420 million and had been put up for sale by receivers in March 2023 after being seized from entities linked to Hong Kong-Danish internet entrepreneur Christian Kwok-Leun Yau Heilesen.

In Cheung Sha Wan, YX in June acquired the 119-key Hotel Ease Access – Lai Chi Kok from the family of Hong Kong’s late “Shop King” Tang Shing-bor for HK$220 million (HK$1.85 million per key).

At HK$5,697 per square foot, the acquisition price represents a 46 percent discount from the property’s HK$410 million (HK$10,617 per square foot) valuation when it was put on the market in June 2023.

Located a seven minute walk from the Lai Chi Kok MTR station at 42A Wing Hong Street, the 38,619 square foot former commercial building was converted into a hotel in 2022. The 21-storey asset comes from a cache of Tang family properties sold or put on the block in recent years by the Shop King’s descendants, or by receivers acting on behalf of their creditors, amid Hong Kong’s property slump.

More Deals Eyed

Crystal is eyeing additional student housing acquisitions and development projects in Kowloon, with the area home to four major universities including Hong Kong Polytechnic University, Hong Kong Metropolitan University, City University of Hong Kong, and Hong Kong Baptist University.

The company is currently working on two additional deals at a total investment of HK$600 million and seeks to tap potential capital partners for future student housing opportunities amid growing interest in the asset class, Chan told Mingtiandi.

“For purpose-built student accommodation, we certainly need capital partners as the market is quite large,” said Chan. “I believe the strategy is getting increasingly attractive to institutional investors as demand is strong and interest rates are heading south.”

In 2022, Crystal and Boston-based fund manager AEW Capital Management completed their acquisition of the 388-key Hotel Sav at 83 Wuhu Street in Hung Hom for HK$1.65 billion ($210 million), with that property having been rebranded as the 600-bed Y83 facility. Crystal holds a 10 percent stake in the asset, with AEW owning 90 percent.

YX also operates the 80-bed Y18 property in Jordan and the 270-bed YHill facility near the University of Hong Kong under master leases.

YX’s portfolio currently spans 1,032 beds across four properties, including the Y36 facility, while the company has yet to detail the number of beds to be offered by the Hotel Ease property. Units in YX’s properties typically comprise single and twin rooms measuring from 4.2 square metres to 18.4 square metres, with monthly rents ranging from HK$6,500 to HK$14,800, according to the company’s website.

Crystal, which develops residential and commercial projects in Hong Kong and mainland China, is led by Nick Lo, son of HKEX-listed apparel manufacturer Crystal International Group chairman Kenneth Lo and grandson of textiles tycoon Law Ting-pong, who founded Hong Kong apparel retailer Bossini.

Bright Spot in a Sluggish Market

Crystal joins a growing number of investors acquiring hotel assets for conversion to student housing after Hong Kong chief executive John Lee last October doubled the admission quota for non-local students from 20 percent to 40 percent. Colliers projects non-local student enrolments in the 2024-2025 academic year will increase to 80,000 from 74,600 a year earlier.

In July, 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 plans to invest in approximately 2,000 student beds in Hong Kong over the next two to three years.

That deal came a month after Hong Kong Metropolitan University paid an estimated HK$1 billion to acquire the Urbanwood hotel in Hung Hom from the Law family behind local developer Yu Tai Hing to accommodate the university’s growing non-local student population.

With student housing standing out as a rare bright spot amid Hong Kong’s property slump, owners of hotels have rushed to put their assets up for sale, with agents currently marketing the Tang family’s Hotel Ease – Mongkok as well as the Eco Tree Hotel in Sai Ying Pun, which is owned by the family of the late “Minibus King” Ma Ah-muk.