Malaysia Overtakes Hong Kong in Flexible Office Space

Malaysia and two other cities in South East Asia have overtaken Hong Kong in the flexible office space market in the latest report released by The Instant Group on 30 July 2020.

According to the workspace innovation company, growth in Hong Kong was slowed compared to previous years, with Kuala Lumpur, Sydney, Singapore and Jakarta overtaking it last year.

Hong Kong’s Dillemma

Hong Kong’s decrease in a number of economic regional competencies is not surprising. Hong Kong has been embroiled in demonstrations since June 2019, which was caused by the contentious, local legislation that would have allowed extraditions to the Chinese mainland.

Local elections have been reported delayed. On 31 July, authorities postponed local elections for a year because of the corona virus, capping a devastating month of political disqualifications, arrests for social media posts and activists fleeing overseas. Compared to the rest of the region, Hong Kong seems less stable and marketable at this point.

Asia Pacific Grows 60% in Supply

Across the rest of the Asia Pacific region, Instant said of the top 20 cities across the region, 60% witnessed double-digit growth in supply throughout 2019.

A local business daily The Edge reported that 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.

Instant Group 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.

Consistent Growth for Three Years

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 Asia Pacific. This year’s growth mirrors the past two years’ growth for the region.

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.

The Effects of the New Norm

“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.

Decentralisation and Remote Work

Businesses will be looking for flexible options in the city as the new norm takes stronger shape in the world. Based on the current lack-lustre of office rental market in KLCC area, another possibility is the decentralisation of working in the city.

Remote work was tested during the MCO period in Malaysia, where many companies held virtual meetings for the continuity of business operations where available. The global pandemic has forced new norms, new work practises and accelerated digitisation. The corona virus certainly brought new meaning to the phrase “not having a choice.”

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