APAC Flex Market

Research Report 2018 APAC Flex Market - The fastest growing region in the world Expanded Edition Contents Introduction 1 City by City Breakdown 41 The Headline Numbers 3 Bangalore 41 Asia-Pacific Region 5 Bangkok 45 Why Does the Flexible Approach Work? 11 Beijing 49 Flex Appeal 13 Hong Kong 53 The Operator View 15 Jakarta 57 Operator Insight 17 Manila 61 Who is Driving the Growth of Flexible Space? 21 Melbourne 63 Expanding Into the City Markets 23 Mumbai 65 Can These Rates of Growth be Maintained? 25 Seoul 69 Where Next for Regional Growth? 27 Shanghai 71 The Landlord Response 29 Singapore 75 A New Approach 32 Sydney 79 The Market Challenge 33 Tokyo 83 Why Are Clients Flexing? 35 Image p.47 © JustCo Who is Flexing? 37 Image p.59 © UnionSPACE Image p.67 © The Executive Centre Image p.73 © WeWork What Does the Future Hold for Flex? 39 All other images used under license from Adobe Stock Introduction 7 OF THE 10 The Asia-Pacific region is host to some of the most expensive markets LARGEST for office space in the world – but co-working and flex workspace FASTEST GROWING is flourishing in these competitive markets, allowing start-ups and GLOBAL MARKETS companies new to its cities a path to market. ARE IN ASIA-PACIFIC Supply of flex space has increased at over 50% in some of the markets across Asia-Pacific over the past 12 months. This rate of growth has been driven by a dynamic mix of established, local operators, and international entrants - now landlords and developers keen to cater for a surge in demand. Instant has been selling flex space in the region for more than 10 SUPPLY OF FLEX SPACE years and was one of the first in our sector to do so. This report IS INCREASING AT uses our proprietary data to present the first comprehensive review of the supply and demand dynamics of Asia-Pacific’s flex OVER 50% workspace market. IN SOME MARKETS The regional market has grown at a faster rate than any other destination ACROSS ASIA-PACIFIC across the globe in recent years. An influx of capital, alongside ever- increasing levels of demand from clients for flexible offices, has enabled rapid expansion in a short period of time. There are several factors from a socio-economic point of view that mean flex workspace is well-suited to the driven, entrepreneurial business cultures of the region’s powerhouse THE TOP 12 cities. But it is also now increasingly attractive for international APAC LOCATIONS firms looking to explore the fantastic opportunities and diverse urban environments across Asia-Pacific. HOST 30% This report will explore the drivers behind the growth of flex space, a review OF FLEX WORKSPACE of supply/demand in the key markets, and our data-led view as to its future direction. ACROSS THE REGION 1 2 The Headline Numbers TOP 20 APAC CITIES The supply of new centres to the region In our view the market is quite substantially larger FORECASTED FORECASTED CENTRE COUNT GROWTH CITY CENTRE COUNT GROWTH increased by 16% over the past year – this than our own records, but the sheer rate of growth 2017 2017 means that there are now approximately 8,600 in many of China’s cities, and a market which 2018 2018 centres providing flex office solutions in has incorporated many small, niche, co-working Hong Kong 340 19% 383 13% the region. environments make it extremely hard to track. Tokyo 282 14% 299 6% Growth levels well above 50% have been seen As investments in more traditional real estate Shanghai 275 12% 320 16% in many localised markets during that time, even elements are providing lower returns across Singapore 265 19% 288 9% among the larger city markets in the region. APAC, investors are increasingly looking towards niche, fast-growing areas to maintain Melbourne 228 19% 252 11% Of the 10 largest global markets for flexible office higher levels of return. Sydney 221 12% 250 13% space, six fell within Asia-Pacific with a further four in the top 20 based on our most recent figures. A recent survey of investors found that of these Bangalore 188 20% 243 29% specialised areas in real estate, 14% plan to invest in Mumbai 158 8% 187 18% In short, this market is seeing the most flexible office businesses, an indication of the interest exciting growth of any global region and has within this market at present and a key driver in the Jakarta 146 16% 169 16% done so consistently over the past five years. flex space revolution across the region. Bangkok 139 10% 155 11% Kuala Lumpur 122 36% 138 13% Gurugram 109 34% 128 18% Brisbane 96 27% 111 16% Beijing 211 18% 236 12% THE SUPPLY AN ESTIMATED New Delhi 94 8% 113 20% OF NEW CENTRES Seoul 86 9% 90 4% HAS INCREASED 8,600 CENTRES NOW PROVIDE Taipei 82 4% 85 4% BY 16% FLEXIBLE OFFICE Pune 67 21% 80 19% OVER THE PAST YEAR SPACE ACROSS THE REGION Hyderabad 70 21% 87 25% Chennai 54 31% 69 27% 3 4 18% 9% 14% GROWTH GROWTH GROWTH Asia-Pacific Region BEIJING SEOUL TOKYO NO. OF CENTRES 141 NO. OF CENTRES 86 NO. OF CENTRES 282 WORKSTATION RATES $847 WORKSTATION RATES $444 WORKSTATION RATES $812 The past 12 months saw mixed results across the key Asia-Pacific markets within the flexible office industry. 8% Some of the larger markets continued to experience GROWTH MUMBAI steady growth in the low-teens while markets in high 12% growth cities such as Singapore & Melbourne saw centre NO. OF CENTRES 158 GROWTH numbers increase by 19%. WORKSTATION RATES $375 SHANGHAI 10% NO. OF CENTRES 302 GROWTH WORKSTATION RATES $635 Of the 2,504 centres identified by Instant BANGKOK across the top 12 Asia-Pacific flexible cities, NO. OF CENTRES 139 Hong Kong continues to remain at the top WORKSTATION RATES $248 4% with 340 centres identified. GROWTH TAIPEI 20% 19% NO. OF CENTRES 82 This is a similar number as can be found in New York and GROWTH GROWTH WORKSTATION RATES $411 is unsurprising given its maturity and the financial and BANGALORE HONG KONG service sectors located within the city. NO. OF CENTRES 188 NO. OF CENTRES 340 WORKSTATION RATES $261 WORKSTATION RATES $626 Despite being an established market, the growth levels in Hong Kong remain some of the highest of our leading 19% 19% GROWTH cities with an increase of 19% in 2017/18. GROWTH MELBOURNE SINGAPORE NO. OF CENTRES 228 NO. OF CENTRES 265 WORKSTATION RATES $506 HONG KONG REMAIN WORKSTATION RATES $533 12% GROWTH MARKET SYDNEY 16% NO. OF CENTRES 221 LEADERS GROWTH JAKARTA WORKSTATION RATES $607 WITH AN INCREASE OF NO. OF CENTRES 146 19% IN 2017/18 WORKSTATION RATES $285 2017/18 MARKET FIGURES 5 6 AVERAGE DESK PRICE (USD) : 2015 : 2016 : 2017 : 2018 (FORECASTED) USD USD 900 900 847 834 824 811 812 800 775 800 750 749 700 660 700 651 631 635 635 626 610 610 607 589 600 569 600 552 543 529 533 511 506 489 499 468 500 455 500 444 432 426 380 375 400 400 327 310 285 285 278 266 300 261 261 265 266 261 300 250 251 248 200 200 BANGALORE BANGKOK BEIJING HONG KONG JAKARTA MELBOURNE MUMBAI SEOUL SHANGHAI SINGAPORE SYDNEY TOKYO 7 8 NUMBER OF CENTRES 2017/18 : CO-WORKING : HYBRID : SERVICED : OTHER CENTRES CENTRES 400 400 340 350 350 4 302 282 300 12 265 300 4 228 5 250 221 250 223 12 188 162 7 134 200 130 200 158 86 139 141 146 91 58 150 8 150 6 67 86 67 66 72 100 52 54 90 100 83 91 79 104 49 43 50 43 50 63 48 73 73 30 54 48 34 34 40 29 24 0 12 20 13 0 BANGALORE BANGKOK BEIJING HONG KONG JAKARTA MELBOURNE MUMBAI SEOUL SHANGHAI SINGAPORE SYDNEY TOKYO 9 10 Why Does the Flexible Approach Work? The rapid growth of Asia-Pacific’s key cities has sizes. Flex workspace allows workers to operate created issues for those seeking office space from more cost-effective space in locations of - flexible workspace provides a sustainable their choosing that do not rely upon an arduous, solution. expensive trip to the central business district. With rents in conventional space among the This combined with the vibrant start-up culture highest in the world, constrained supply of new in these markets means that co-working and flex space coming to market, and transport congestion, workspace provides a robust alternative to office these are the perfect conditions to drive a more markets that can be prohibitively expensive to all but agile approach to workspace for companies of all the most well-established corporate firms. POPULATION GROWTH FORECAST TO EXCEED OFFICE SPACE IS AT A PREMIUM 5% YEAR ON YEAR INCREASING FOCUS ON SERVICE SECTOR JOBS 6 OF THE WORLD’S TOP 10 MOST CONGESTED CITIES ARE IN ASIA ASIA-PACIFIC START-UPS ARE FINALLY STARTING TO RAISE SERIOUS INVESTMENT ALLOWING FOR 5 OF THE WORLD’S TOP 10 COUNTRIES FOR EXPANSION - FUNDING IN CHINA AND SOUTHEAST LONGEST COMMUTE TIMES FALL WITHIN ASIA ASIA REACHED RECORD LEVELS IN 2017 LARGE AND DIVERSE TARGET MARKETS, OFTEN $19.3 BILLION WAS RAISED ACROSS THE REGION HARD TO ACCESS QUICKLY IF OFFERING A IN THE FIRST HALF OF 2017 ALONE - THAT’S MORE PHYSICAL PRODUCT THAN WAS RAISED BY FIRMS IN SILICON VALLEY 11 12 Flex Appeal In Japan senior managers, who are often older, experienced more western culture feel comfortable The introduction of flexible workspace into the where they base themselves, and at a lower cost.

Load more