- According to The Instant Group, the flexible workspace market in Asia-Pacific has grown at a faster rate than any other destination in recent years.
- Supply of flexible workspace has increased at over 50% in some APAC markets over the past 12 months.
- Demand is partly driven by a vibrant startup culture and a rise in serious investment for early-stage businesses.
This year we’ve seen how flexible workspace operators in Asia-Pacific have captured many of the industry’s headlines. In fact, as early as January of 2018, APAC was already booming with flexible workspace action thanks to a number of trends and driving forces.
International workspace operators have doubled their efforts to enter the region, local operators have experienced an influx of investment, and regional property owners have started to pave their way in the industry. Demand in the region continues to grow, providing endless opportunities for the industry to expand and evolve.
Instant Group recently published the report “APAC Flex Market – The fastest growing region in the world”. According to their findings, “the regional market has grown at a faster rate than any other destination across the globe in recent years.”
Rapid Expansion in a short period of time
According to The Instant Group, supply of flexible workspace has increased at over 50% in some APAC markets over the course of the past 12 months and there are now approximately 8,600 flexible workspace centers in the region.
Although the industry took off in Asia later the US, UK, and European markets, APAC has made up for lost time and is now up to date with current global industry trends.
1. Corporate demand is in large part powering the growth of national and international operators. Todd Liipfert from the Executive Centre commented in the report that, “deals with Fortune 500 companies have driven our recent expansion to new centres in Singapore, Hong Kong, Tokyo, Beijing, Mumbai, and Sri Lanka.” Similarly, Australian-based Office Hub also reported that corporates and large enterprises became a primary flexible workspace user this year.
2. We’re seeing increased merger and acquisition activity in the region. Earlier this year Ucommune acquired Woo Space, Wedo, and New Space ; Ultimate Office Solutions in Sydney (UOS), CSBC in Melbourne, and The Workstation in Brisbane merged to create Workspace365; WeWork acquired naked Hub; and International Workplace Group (IWG) bought BizDojo, among others.
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3. Property owners and investors are setting their sights on the industry. Instant’s report found that “investors are increasingly looking towards niche, fast-growing areas to maintain higher levels of return.” Furthermore, of investors specialized in the areas of real estate “14% plan to invest in flexible office businesses (…) Many landlords are looking to joint ventures and profit sharing models with operators who supply design and technology for a management fee.”
This is already happening: CapitaLand launched its “office of the future strategy”, which includes offering flexible workspace to tenants, JustCo entered into a joint venture partnership with property owner TICON, and Ucommune partnered with property developer Vanke.
4. Coworking in malls is taking off. Singapore-based coworking operator, JustCo, announced this year that it secured a space at the upcoming Smyan Mitrtown building, a mixed-use complex comprising of premium commercial retail and office space.
Poised for more growth
“The forecast for Asia-Pacific’s flex market looks positive with pricing and enquiry numbers increasing and it does not appear that oversupply has outpaced customer demand.”
Currently, 7 of the 10 largest and fastest-growing global markets for flexible workspace are in Asia-Pacific. Instant Group believes the APAC region will continue to grow at a rapid pace, especially in new high growth markets.
Instant Group lists the below trends as key drivers of flexible workspace demand in the region:
- 5 of the world’s top 10 countries for the longest commute times are in Asia.
- APAC boasts a vibrant startup culture, which means that there is ample demand for coworking spaces from this segment, especially considering that office space in the region is at a premium.
- Startups in the region are starting to experience a raise in serious investment, which they are using to power their expansion. They are looking at flexible space as a key tool to enabling their growth efforts.
The report finishes with a cautionary note, warning those interested in entering the industry that they must be committed to developing their customer base, as fruitful returns may only be experienced after several years of being in operation.