As outlined in the Chief Executive’s 2025 Policy Address, Hong Kong’s Hostels in the City Scheme represents a strategic initiative to convert underutilized commercial properties, such as hotels and office buildings, into student hostels. Launched in July 2025, Hong Kong’s Hostels in the City Scheme converts underused commercial properties into student hostels to address a shortage of nearly 50,000 beds, driven by 92,000 non-local students in 2024/25. With office vacancies at 17.4% in Q2 2025 and 3.33 million sq ft of new supply projected, the scheme streamlines conversions, retains excess GFA for amenities, boosts property values, and revitalizes districts like Hung Hom and Jordan, reinforcing Hong Kong’s role as a global education hub.
Current Supply Landscape: University Dorms and Private Hostels
Hong Kong’s student housing is primarily anchored by university-run dormitories, with major campuses like HKU in Pok Fu Lam, CUHK in Sha Tin, HKUST in Clear Water Bay, PolyU in Hung Hom, and CityU in Kowloon Tong offering residences for thousands. These are complemented by a smaller network of private hostels in bustling districts like Tsim Sha Tsui, Causeway Bay, and Jordan, often repurposed from old hotels to serve students unable to secure campus spots. Despite these options, the supply falls short, with far more students vying for limited beds, a gap projected to widen significantly by 2028. The scheme’s push to expand private hostel offerings is a vital step to ease this strain.
Addressing Vacancies and Housing Needs
Targeting lower-tier hotels and non-Grade A offices amid doubled office completions, the scheme mandates 90% student occupancy within 18 months, excludes industrial buildings, and offers regulatory exemptions like waived open space requirements. Early adopters, including Hong Kong Metropolitan University and Centaline Property, signal strong market traction, easing private rental market strain and ensuring stable revenue through high occupancy and advance payments.
Enhancing Property Values Through Adaptive Reuse
Conversions under the scheme unlock stable rental income, potentially increasing non-Grade A property values by 10-20%, with relaxed GFA and Plot Ratio rules lowering costs. This reduces vacancy risks and boosts foot traffic for nearby retail and residential assets, particularly near universities, aligning with initiatives like the 90-hectare Northern Metropolis University Town to drive long-term investment appeal.
Exploring Alternative Uses for Vacant Commercial Properties
The scheme inspires broader repurposing of commercial spaces into co-living, talent housing, or data centers for AI growth, subject to zoning approvals. Mixed-use developments integrating educational, retail, or healthcare facilities can further reduce vacancies and align with government efforts to rezone commercial sites for residential use, fostering vibrant urban ecosystems.
Navigating Challenges in Property Transformations
High conversion costs for fire safety and ventilation, zoning constraints, and operational demands like curfews pose challenges. A six-month sales notice and non-alienation clause ensure stability but allow flexibility to revert uses. Public-private partnerships and cost optimization are essential to balance student welfare with investment viability.
How BonVision Supports Your Strategy
BonVision offers expert valuation, market analysis, and strategic advisory tailored to university-adjacent districts like Hung Hom and Pok Fu Lam. Our data-driven insights on conversion feasibility, vacancy trends, and demand dynamics empower clients to optimize portfolios, mitigate risks, and seize opportunities in Hong Kong’s evolving urban landscape. Contact us for customized solutions.