The Quad aims to serve Hong Kong’s higher education market (Image: Google)
China Merchants Commercial REIT and a BentallGreenOak fund are picking up a student housing project in Kowloon at a 40 percent discount from the original owner’s total investment cost.
The REIT managed by Shenzhen’s China Merchants Land announced to the Hong Kong stock exchange on Friday that it has teamed up with a fund backed by BentallGreenOak China Holdings and Hong Kong’s Welkin Links Capital Group to acquire The Quad, a 205-bed student hostel in the Hung Hom area, for HK$528.5 million ($67 million).
“The acquisition of the property, which is already operating as student accommodation, is consistent with CMC REIT’s strategy of exploring income-generating real estate opportunities in new asset classes,” said China Merchants Commercial REIT’s manager.
The acquisition is China Merchants Commercial REIT’s second student housing investment in the city as an influx of mainland Chinese students helps to drive demand for university housing in the city and pulls in investors hunting for bargains in a beaten-down Hong Kong market.
One-Year Old Project
The seller of the 184-room property is local developer and investor Easyknit International Holdings, with president and CEO Candy Koon Ho Yan having told local media last year that the company had invested a total of HK$880 million in the project.
John So, co-head and managing director at BGO Strategic Capital Partners (Image: BGO)
The Quad generated HK$18.9 million in revenue in the twelve months ended 31 March and is now 100 percent occupied, according to a separate exchange filing by Easyknit International. The property is operated under a cooperation agreement with student housing platform iRENT, which will remain in force until July 2027.
Situated a five-minute walk from To Kwa Wan MTR station at 470-478 Chatham Road North, The Quad is a 29-storey tower with 3,890 square metres (41,875 square feet) of gross floor area. China Merchants Commercial REIT and its partners are paying the equivalent of HK$2.58 million per bed for the property.
The REIT owns a 55 percent stake in the joint venture buying the property, with the BGO-Welkin fund holding the remaining 45 percent. The JV is paying HK$12,621 per square foot for the property with the BGO-Welkin fund serving as general partner for the fund.
Easyknit International obtained the occupation permit for the property a few bus stops from Hong Kong Metropolitan University and The Hong Kong Polytechnic University in March 2025 and launched it as a student hostel in June of that year.
EasyKnit had gained full ownership of the ageing buildings previously occupying the project site in 2021.
Vincorn Consulting and Appraisal Limited valued The Quad at HK$524 million as of the end of July while JLL valued the property at HK$569.4 million as of the end of May, according to the filings by Easyknit International and China Merchants Commercial REIT.
Proceeds to Settle Loan
Easyknit International said it intends to use HK$346.3 million of the sale’s proceeds to repay a bank loan secured by the property, with the debt, which is currently under negotiation for an extension, set to mature on 31 August.
“The Board considers that the immediate realisation of value, potential reduction in finance costs and gearing, and enhanced flexibility to redeploy capital into the group’s businesses and other opportunities outweigh the benefits of retention,” Easyknit’s Koon said.
For the year ended 31 March, Easyknit International posted a net loss of HK$435.3 million, according to its annual results, while the entity holding the property recorded a loss of HK$208.9 million.
Joining a Red-Hot Sector
Originally holding mainland commercial properties, China Merchants Commercial REIT expanded into Hong Kong’s student housing sector in December by acquiring the Austin Avenue Hotel for HK$205.9 million, with that property now being converted for use as student housing.
China Merchants Commercial REIT’s acquisitions are part of a wave of institutional investment in the sector as the city’s non-local student admission quota at publicly funded universities rises to 50 percent from the 2026-2027 academic year, up from 20 percent two years earlier. Colliers projects a shortfall of 120,000 student beds in the city by 2028.
Last month, China’s JD.com agreed to acquire the Silka Seaview Hotel in Kowloon from Far East Consortium International for HK$750 million ($95.6 million) with that property set to be fully converted for student use before the end of this year.
Other major deals in the red-hot sector in recent months include Singapore developer and fund manager Wee Hur Holdings’ June acquisition of One Bedford Place in Tai Kok Tsui for just under HK$750 million.
In March, China Resources Longdation’s acquired the Hotel Cozi Oasis in Kwai Chung for HK$953 million in March and during that same month, Centaline Investment picked up the 494-room Regal Oriental Hotel in Kowloon City for HK$1.5 billion.
