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News Release

HO CHI MINH

Southeast Asia office demand surges

By Regina Lim, Head of Capital Markets Research, SEA, JLL


HO CHI MINH 22 June 2018 - Office take-up in Southeast Asia accelerated over the last five quarters

 

Due to slower economic growth, office take-up in Southeast Asia grew at a slower pace of 5.5% annually in 2014-2016, compared to circa 8% annually in 2010-2013. However, over the last five quarters, office demand started to recover. In 1Q18, office take-up in the region grew by 6.8% yoy.

 

Looking forward to 2018-2022, we expect office take-up in Southeast Asia to stay strong, growing at 6% annually, amid GDP growth of 5% p.a.


Chart 1: Office net absorption in Southeast Asia (yoy)


​Source: JLL Research


Strongest demand growth came from Singapore and Jakarta

 

The sharpest turnaround in office take-up in the last four quarters came from Jakarta and Singapore. Both markets have experienced high supply growth in 2016-2017 but also strong absorption as occupiers move into the newer buildings from 2017 onwards. Smaller tenants moved into some of the vacant spaces while some of the older buildings have been adapted for other uses.

 

In both Jakarta and Singapore, stronger economic growth underpinned occupier expansions. Downsizing in the oil and gas sector in Jakarta has stabilised with some expansions expected this year. In Singapore, major leasing deals signed by technology companies in 2017 included Facebook and Grab for 250,000 sq ft and 100,000 sq ft of space, respectively, in Marina One.  Examples of co-working operators which have expanded include JustCo's space in Marina One, Ucommune's second co-working office in Suntec City and The Great Room's space in Centennial Tower.

 

In Vietnam, the market steadily becomes an attractive destination for foreign start-ups due to open and dynamic business environment. Then, while co-working space demand also increase rapidly, well-known operators such as Toong, Naked Hub and DreamPlex are looking forward to expanding flexible spaces of their business in big cities especially the economic hub of Ho Chi Minh, Ha Noi and Da Nang. According to Stephen Wyatt, Country Head, Vietnam, JLL said "Flexible space appeals not only to the younger generation's love of working in an open, well-designed space and an active workplace environment, but it also offers reduced costs in sharing fit-out expenses and making better use of resources. Flexible space offers a cheaper price and smaller, more flexible spaces for young companies compared to traditional office leasing."   

 

Flexible work spaces are expanding rapidly in Asia

 

The flexible space sector in Southeast Asia is expanding rapidly in line with growth in Asia Pacific. In Singapore, flexible work space already take up 2.8% of occupied office space, after growing over 30% CAGR in the last three years.

 

From 2014 to 2017, flexible space stock across Asia Pacific recorded a compound annual growth rate of 35.7% – much higher than in the United States (25.7%) and Europe (21.6%) over the same period. What initially began as a platform for freelancers and startups, flexible space providers are now tailoring their offering to accommodate corporate users.  These corporate users are experimenting with co-working with pilot schemes.

 

For more details, refer to our note "Southeast Asia office demand surges".

 

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Agency Leasing , Consulting , Facilities Management , Property and Asset Management , Capital Markets


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries and a global workforce of 83,500 as of March 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.