China Merchants REIT, BGO Buy HK Student

China Merchants Commercial REIT and a BentallGreenOak fund have acquired a student housing project in Hong Kong for HK$528.5 million ($67 million). The joint venture purchased The Quad, a 205-bed hostel in Hung Hom, Kowloon, at a 40 percent discount to the original owner's total investment, according to a Friday stock exchange filing.

China Merchants Commercial REIT's manager stated the deal aligns with its strategy of exploring new income-generating asset classes. The property is already fully operational as student accommodation. This marks the REIT's second investment in Hong Kong's student housing sector, as an influx of mainland Chinese students helps drive demand, a trend visible in our stats on market activity.

Acquisition Details

The seller is local developer Easyknit International Holdings. Its president and CEO, Candy Koon Ho Yan, told local media last year that the company had invested HK$880 million in the project. The joint venture is paying HK$2.58 million per bed.

The REIT owns a 55 percent stake in the purchasing vehicle, with a fund backed by BentallGreenOak China Holdings and Welkin Links Capital Group holding the remaining 45 percent. The property was valued at HK$524 million by Vincorn Consulting and Appraisal Limited as of July's end. JLL valued it at HK$569.4 million in May.

The Property and Its Performance

The Quad is a 29-storey tower at 470-478 Chatham Road North in Kowloon. It is a five-minute walk from To Kwa Wan MTR station. The property has a gross floor area of 3,890 square metres (41,875 square feet).

Easyknit International obtained the occupation permit in March 2025 and launched it as a student hostel that June. The building is fully occupied. For the twelve months ended 31 March, it generated HK$18.9 million in revenue. It is operated under an agreement with student housing platform iRENT, which runs until July 2027.

Seller's Motives and Market Context

Easyknit International plans to use HK$346.3 million of the sale proceeds to repay a bank loan secured by the property. That debt is due on 31 August and is under negotiation for an extension. Candy Koon stated the board considered the immediate value realization and potential reduction in finance costs to outweigh the benefits of retaining the asset.

The company posted a net loss of HK$435.3 million for the year ended 31 March. The entity holding The Quad recorded a loss of HK$208.9 million. Easyknit had gained full ownership of the ageing buildings on the site in 2021.

A Wave of Institutional Investment

The acquisition is part of a surge of institutional money into Hong Kong's student housing market. China Merchants Commercial REIT first entered the sector in December by acquiring the Austin Avenue Hotel for HK$205.9 million for conversion. This wave of investment is pulling in buyers hunting for bargains in a beaten-down market, a dynamic reflected in our standings of major asset transactions. Demand is being driven by an influx of mainland Chinese students and a policy change. The non-local student admission quota at publicly funded universities will rise to 50 percent from the 2026-2027 academic year, up from 20 percent two years earlier.

Recent major deals in the sector include JD.com's HK$750 million acquisition of the Silka Seaview Hotel for conversion. In June, Singapore's Wee Hur Holdings bought One Bedford Place for just under HK$750 million. Other purchases this year include China Resources Longdation's HK$953 million acquisition of the Hotel Cozi Oasis and Centaline Investment's HK$1.5 billion purchase of the Regal Oriental Hotel.