APAC flex workspace demand grew 16% in H1 | Real Estate Asia
, APAC
178 views

APAC flex workspace demand grew 16% in H1

The average transaction size was at 9.6 desks.

According to a research by The Instant Groupdemand for flexible workspaces across APAC is up sixteen per cent in the first half of 2023 compared to the second half of 2022. 

The data comes from the newly released 2023 APAC Flexible Workspace Market Review, which shows that although recovery in APAC is slower than the UK (up eighteen per cent for the same time period) and EMEA (up twenty four per cent), the region is now rebounding and the outlook is positive. 

The report reveals that the average transaction size across APAC has remained stable in the first half of 2023 at 9.6 desks compared to the second half of 2022, but has increased by one hundred and thirteen per cent compared to the first half of 2019 when it was at 4.5 desks. This is reflective of the shift in occupiers of flex space, with a larger number of corporate clients now utilising flex to support their agile office needs.  

Transactions for 1-2 desks across APAC have reduced from fifteen per cent of total flex desks in 2019 to five per cent in 2023, whereas transactions for 25+ desks have increased from twenty four per cent of total flex desks occupied in 2019 to forty two per cent in 2023. Contract lengths for flex space have increased by five per cent, from 10.2 months in the second half of 2022 to 10.7 months in the first half of 2023; however they are still down from where they were during the first half of 2019, by seven per cent (11.5 months). 

“Overall across APAC, occupier confidence is returning to the flex market with markers such as demand and the number of transactions all continuing to grow. Companies are taking on flex as an agile workspace solution, however many are still reluctant to commit for long periods of time due to ongoing economic uncertainties.” said Sean Lynch, Managing Director at The Instant Group APAC. 

Demand is stabilising after a “post-Covid bubble”  

During parts of COVID-19, as well as post-pandemic, we saw a knee-jerk reaction to the need for immediate change, which resulted in high demand for flexible workspaces. The historic levels that we saw are now stabilising as companies take a more measured approach to their workplace strategies. Singapore is still in a very strong position, with forecast demand for 2023 expected to be up by forty one per cent compared to 2019 levels. However, after record demand levels in 2022, we have seen demand figures pull back year on year. 

In 2023, Singapore demand is forecast to be down twenty eight per cent compared to 2022. Mumbai experienced a similar trend, where demand levels are predicted to be higher in 2023 than those seen in 2019, up by five per cent. Year on year however (2023 vs 2022), demand is forecast to dip by twenty three per cent. Markets that are forecast to see positive growth in 2023 compared to 2022 include Tokyo, Hong Kong, Jakarta and Seoul, up by twenty five, twenty, thirteen and seven per cent respectively. 

“While we have seen demand decrease year on year in some markets, this can be explained by a demand correction taking place. We saw high demand growth across many APAC markets in 2021 and 2022, with historic levels due to COVID-19, and a move toward flexible ways of working. However, this is now slowing down. On the whole we are seeing quality enquiries come through that convert into uptake of office space.” added Sean Lynch, Managing Director at The Instant Group APAC.  

Stock levels remain flat across the APAC region  

Across APAC, new stock of flexible workspaces coming onto the market has been fairly flat, with many cities seeing little to no growth across the first half of 2023 compared to the whole of 2022. Sydney and Manila saw no growth while Brisbane, Bangalore, Hong Kong, Melbourne, Shanghai and Tokyo saw between one and three per cent growth. Jakarta and Seoul showed a marginal improvement compared to other cities, with an increase in supply by five and nine per cent respectively for the same time period. 

Hong Kong is the most expensive APAC city for a flex desk

Rates, as always, are linked to the state of demand and supply in each market. In Hong Kong, demand is forecast to increase by twenty per cent in 2023 compared to 2022, resulting in a three per cent increase in rates. It is also the most expensive city for flex in the region with a desk in Hong Kong costing an average of 609 USD per month in 2023. Across APAC, rates are predicted to increase the most in Brisbane in 2023, up by twenty six per cent compared to 2022.

Unlike many other markets across Australia, demand in Brisbane continued on an upward trajectory throughout the pandemic despite experiencing a decline this year, whereas supply has remained relatively stagnant. This imbalance is driving the significant increase in rate growth but is expected to stabilise over the next few months. Other markets forecast to experience sizable rate increases in 2023 include Jakarta, Manila, Tokyo, Mumbai, up by eighteen, thirteen, twelve and twelve per cent respectively.

 

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.