HK Coworking Space Operators

HK Coworking Space Operators To Undertake More M&As

HONG KONG – Experts said that as the government relaxes its COVID-19 restrictions and the demand for flexible offices rises, coworking space operators in the Chinese territory are expected to undertake more mergers and acquisitions (M&As), reported the South China Morning Post (SCMP) on Wednesday afternoon (30 March, SGT).

Market watchers said that as more companies let their staff return to the office or embrace hybrid work arrangements, coworking spaces could be a better option for them than traditional office space.

“We have already seen a lot of activity around M&As and investment into the sector, and expect this to continue,” said Jonathan Wright, Director of flexible workspace consulting at Colliers Asia, who added that the average occupancy level for flexible offices presently hovers at a stabilised rate of over 80 percent.

Experts said that businesses in Hong Kong are expected to rethink their property needs as the government eases its COVID-related curbs, and local coworking space providers have been busy positioning themselves to take advantage of this shift.

Last June, coworking space operator The Executive Centre was bought by private equity firm KKR and Tiga Investments. Last August, Hysan Development teamed up with IWG to open flexible offices in the Greater Bay Area.

“As the sector evolves, we have witnessed more corporate occupiers using flex spaces in addition to their core office footprint within traditional offices. We have also seen a couple of new operators looking to enter the market,” noted Ada Fung, Head of advisory and transaction services for office at CBRE Hong Kong.

Earlier this month, IWG purchased the digital assets of The Instant Group, which offers virtual office solutions. While the present curbs in Hong Kong and mainland China are impacting The Instant Group’s business, it is seeing some signs of recovery.

“Across Hong Kong, The Instant Group saw demand increase by 22.5 percent last year compared to… pre-pandemic levels, a sure sign that the demand growth we are seeing in other global markets will also become apparent in Hong Kong and Mainland China,” said the company’s director, Bobby Sodeiri.

In March 2022, theDesk revealed that it had bought Jumpstart Business Centre, which operates serviced offices in Kwun Tong, Tsim Sha Tsui, and 3 branches in Shanghai.

One firm that has chosen a coworking space instead of a traditional office space is Armor Capital, which has 10 employees in Hong Kong and abroad. The financial services firm moved from an office in Wan Chai to one of theDesk’s outlet. Armor is likely to save between 15 percent and 25 percent in office rents in 3 years.

“There is strong demand from occupiers for flexible work spaces, and therefore we believe the sector will perform well in terms of occupancy in 2022. We will see deeper partnerships between asset owners and operators to satisfy demand, and we will also see asset owners position their buildings with meaningful and integrated amenities to elevate tenant experience,” added Colliers’ Wright.

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