Hong Kong’s ambition to establish itself as a global education hub has unleashed unprecedented demand for student housing. With nonlocal enrollment surging to 92,000 students, the city is experiencing a boom in student population, driven by strategic policy initiatives and the fact that Hong Kong is the only city with five universities ranked within the top 100 in the world. However, beneath this strong growth lies a sobering reality: Hong Kong’s student housing stock is woefully unprepared for the scale of demand.

The issue is no longer just about a shortage of beds. It’s about affordability, inclusivity, and whether the city can sustain its long-term educational aspirations. In the 2025 Policy Address, the chief executive acknowledged the challenge and encouraged private-sector involvement in addressing the shortage. While this is a step in the right direction, Hong Kong needs a multipronged, long-term approach to address this issue to nurture future talent and establish the “Study in Hong Kong” brand.

The roots of this acute housing shortage lie in a series of policy decisions that, while successful in attracting talent, have outpaced the city’s housing infrastructure. The government’s relaxation of the nonlocal student quota, from 20 percent a few years ago to a target of 50 percent next year, and the allure of the Immigration Arrangements for Non-local Graduates (IANG) visa leading to the prospect of permanent residency have created a tidal wave of demand.

Additionally, global student flows have shifted. The United States, once a dominant destination, has faced challenges in attracting sufficient international enrollment due to policy instability under the Trump administration. These demands have been diverted to other countries and regions. Hong Kong, by contrast, has emerged as an attractive alternative.

However, this success has come at a cost. The city now faces a shortfall of 94,000 student beds, with projections indicating that this gap could balloon to as much as 120,000 by 2028. Government initiatives, such as the Hostels in the City Scheme to convert commercial spaces into student housing and the allocation of land for development, are a very good start. Yet, these measures are unlikely to fully meet the scale of the growing demand.

Over the past couple of years, there has been increasing commercial interest in student housing investments, including several en bloc redevelopments of industrial properties into dormitories. Yes, additional supply is coming onto the market. However, even as new beds are being built, the affordability outlook remains bleak. In neighborhoods near universities, privately developed student housing now commands rents of HK$70-80 ($9-10) per square foot, pushing a modest 120 square-feet room to over HK$10,000 per month. On a per-square-foot basis, this makes it more expensive than serviced apartments.

For families of nonlocal students, particularly those from the Chinese mainland, this financial burden is compounded by intermediaries bundling accommodation with admission and visa services. These agencies will surely add another layer of profit to an already expensive proposition. In essence, student housing has evolved into a premium financial product for visa students, accessible mainly to those who can afford it.

Looking at other cities around the world, especially those with world-class universities, student housing can be very expensive but can also be relatively affordable with the involvement of local community partners. Hong Kong can take reference from this multistakeholder solution that prioritizes affordability and community integration. A mix of public-private partnerships (PPPs) and community home-stay initiatives could chart a sustainable path forward.

The goal should not simply be to house students, but to create a nurturing environment that attracts and retains the brightest talent from around the world. In doing so, Hong Kong can reaffirm its commitment to education as a public good, rather than a commodity

The success of any PPP project requires a carefully calibrated commitment from all sides. The government must offer incentives like preferential land premiums, explicitly tied to developments delivering a substantial portion of units at below-market rents. Universities must act as steadfast stewards, negotiating contracts that enshrine affordability and mandate the creation of vibrant, supportive communities — not just bedrooms. For the private sector, this means treating these projects as stable, long-term infrastructure assets, where moderated returns are balanced by lower risk and positive social impact. Crucially, contracts must grant universities ongoing oversight to ensure that affordability and community goals are not eroded after construction is complete.

For the home-stay program, Hong Kong can tap into a pool of overlooked yet potentially very valuable resources: the surplus space in homes owned by retirees. With over one-fifth of the population aged 65 or above, many of these residents live in underoccupied homes but are deterred from subletting by the sheer hassle involved. A trusted, official platform that vets participants, standardizes agreements, and manages logistics could remove these barriers. This initiative would provide seniors with supplemental income and companionship, while offering students an affordable and culturally immersive living experience. It’s a sustainable solution, as the percentage of retirees grows every year, that not only addresses the deficit of student accommodation stock but also strengthens the city’s social fabric.

The student housing shortage is more than a logistical challenge; it’s a litmus test of Hong Kong’s ability to balance growth with equity. By adopting a mix of well-structured PPPs and shared-value solutions like a home-stay program, the city can transform its student housing landscape into a model of sustainability and inclusion. The goal should not simply be to house students, but to create a nurturing environment that attracts and retains the brightest talent from around the world. In doing so, Hong Kong can reaffirm its commitment to education as a public good, rather than a commodity.

The author is a senior lecturer of marketing at the Hang Seng University of Hong Kong.

The views do not necessarily reflect those of China Daily.