Real estate investment firm Centaline Investment has acquired the 494-room Regal Oriental Hotel and plans to convert it into student housing in its goal to have 6,000 student-housing beds in Hong Kong in the next two to three years.
Centaline has agreed to pay 1.5 billion Hong Kong dollars ($191.4 million) for the hotel and plans to invest another HK$500 million in converting it.
According to a company news release, the “acquisition reinforces [Centaline's] long-term conviction in the sector, supported by resilient education demand and improving real estate market fundamentals.”
Centaline hinted that the hotel once converted will sit within its CampusOne Communities brand, which already includes the One Pace 117 student-housing complex in Hong Kong city Tsim Sha Tsui, the autonomous region’s largest university hub.
The deal is expected to close April 30, with the first phase of the new accommodation type opening in September.
According to CoStar, the seller is Regal — based in Hong Kong — which increased the hotel’s room count in 2014 from 390 rooms to its current number. Regal developed and opened the hotel in 1982, which is in the city’s Kowloon district.
“Student housing is no longer a niche segment,” said Josephine Kong, Centaline’s managing director and chief investment officer in the news release. “It is becoming essential infrastructure for a global education hub like Hong Kong, and it is growing to be an institutional-grade investment asset.”
Regal’s hotel and hospitality assets are held within four ownership vehicles — Century City International Holdings, Paliburg Holdings, Regal Hotels International Holdings, and Regal Real Estate Investment Trust.
In a note posted to the Hong Kong Stock Exchange, Regal said the hotel had sold at a discount of HK$1.29 billion, to its appraised 2025 appraised value of HK$1.68 billion. Regal added funds received from the same would reduce its gearing ratio.