KUALA LUMPUR (July 30): Malaysia has overtaken Hong Kong in the flexible office space market, which has seen a third successive year of high growth.
According to workspace innovation company The Instant Group, growth in Hong Kong was slowed compared to previous years, with Kuala Lumpur, Sydney, Singapore and Jakarta overtaking it last year.
In a report released today, Instant said of the top 20 cities across the region, 60% witnessed double-digit growth in supply throughout 2019.
It noted several Indian markets, including Hyderabad and Pune, are currently among the fastest growing markets in the Asia-Pacific region as more mature markets have witnessed slower growth, mainly due to the lack of vacant office space available.
The group highlighted the flexible office market remained strong in the Asia-Pacific region over the past 12 months despite a tumultuous backdrop of political unrest and social uncertainty by Covid-19. It said the industry appears well placed to benefit from the changes to office strategy from companies across the region.
It noted the resilience of client demand in the face of these issues points to a bright future for the Asia-Pacific flexible office solution and suggests that the broader approach to the procurement and operation of offices has changed for the long term.
Supply of flexible workspace which consists of co-working, serviced offices and space as a service grew by 19% over the past 12 months in the region, the third successive year of high growth.
Instant added there are now nearly 10,000 centres for flexible workspace in the region, meaning that it is fast catching up to the more established markets of Europe and the US, despite its relative immaturity. Seven of the ten fastest growing markets for flexible workspace are now in Asia, the group said.
Instant's Asia-Pacific managing director Sean Lynch said the impact of Covid-19, the first Black Swan event to be seen in a generation, has been severely felt across the industry and is not something that can be ignored.
“The trends that we expect to see during 2020 will no doubt be very different to what the industry has seen in the past, but the long-term future still looks very healthy," said Lynch.
He added that a trend that started with younger workers looking for short-term, flexible space has become a key tool for businesses of all sizes and is a trend that will only grow in momentum across the Asia-Pacific region in the coming months as companies that have expiring leases look at ways to future-proof their workplace strategy.
Instant said the previously expected levels of new investment are unlikely as providers look to solidify their existing operations, and there is no doubt that certain providers will not be able to weather the storm.
These two factors mean that for 2020 at least, the growth in supply is likely to be cut right back to single-digit levels of just 6%, a far cry from the levels seen over the last five years, it added.
“As businesses, we face challenges that are outside of our control, but with the fierce competition growing across the region, this can only give more options to our clients and push us all to evolve,” Lynch concluded.