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APAC flexible workspace demand rises 13% despite challenging economic conditions

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The Instant Group, the world’s largest marketplace for flexible workspace, has released its 2024 APAC Flexible Workspace Market Review, revealing a 13% increase in demand for flexible workspaces across the Asia Pacific region over the past five years, despite subdued market conditions in 2023.

While the growth in APAC lags behind the 35% and 59% demand growth seen in the EMEA and Americas regions respectively, the upward trend remains consistent. The report explores the latest trends in supply, demand, pricing, and client expectations to help operators position their business strategies for the coming year and beyond.

Auckland and Seoul experienced the strongest demand growth in APAC, with increases of 22% and 20% respectively over the last five years. Other growth markets include Shanghai, Jakarta, and Mumbai, with demand increasing by 9%, 8%, and 6% respectively. However, Hong Kong, Sydney, and Melbourne have been severely impacted by lower-than-expected demand levels, down by 8%, 7%, and 7% respectively.

Sean Lynch, Chief Customer Officer APAC & EMEA, said, “The flexible workspace sector has faced and is still facing a tough set of economic conditions. And while demand has been slower than originally expected, it’s still up across APAC over the last several years, showing resilience compared to the conventional office market.”

To attract and retain clients, operators have reduced desk rates in response to the challenging economic backdrop. Kuala Lumpur experienced the biggest drop in rates year-on-year, with a flex desk costing an average of $365 per month, down 32% compared to 2022. Jakarta’s desk rates dropped by 16%, while Mumbai and Bangalore both saw rates decline by 9%.

However, some cities bucked this trend, with Metro Manila, Singapore, and Sydney seeing desk rates increase by 15%, 14%, and 2% respectively. Tokyo remains the most expensive city for a flexible desk in APAC, with rates averaging $792 per month.

Supply of flexible workspace has grown slowly across APAC, with a 2% increase over the past five years. Operators are focusing on increasing profitability and occupancy rather than expansions due to higher operating costs and slower demand in some markets. However, 67% of operators expect to increase their footprint over the next two years, according to The Instant Group’s Future of Flex Survey.

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The occupier profile in the flexible workspace sector is also shifting, with corporate clients showing a preference for larger flex offices. In 2023, 35% of flex requirements were for over 26 people, compared to just 18% in 2019, as businesses downsize their traditional offices and leverage flexible solutions to offer more workplace choice to employees.

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