As growth in Southeast Asia’s online economy gains pace, US property consultancy John Lang LaSalle (JLL) projects that technology companies will drive office occupancy, potentially accounting for 15-25 per cent of annual gross office leasing volumes in the next decade compared to about five to 10 per cent three years ago.
Technology companies have become a key office occupier group in the region, and they are frequently the earliest tenants to pre-commit to new buildings, JLL said in a report titled “Technology firms transform Southeast Asia”.
“Given that technology firms will become a key source of office occupancy, this is an opportunity for real estate investors and developers to create space that will meet this need,” Regina Lim, head of capital markets Southeast Asia research, JLL, said.
“Last year the tech sector attracted over US$6 billion in funding, and the industry’s growth will contribute significantly to future office leasing volume, which we estimate will rise at 6 per cent annually amid a GDP growth rate of around 5 per cent.”
Stephen Wyatt, country head of JLL Viet Nam, said: “There is no better place to witness the growing demand from Technology firms and co-working operators than Viet Nam.
“The country is catching up fast with its regional peers, due to a young, dynamic, tech-savvy, entrepreneurial population. We have seen a dramatic increase in demand from technology firms and co-working/flexible working operators over the past three years and anticipate this will be one of the key trends over the next five years.”
Southeast Asian economies are forecast to expand at 5 per cent annually until 2020, exceeding the global rate of 3.5 per cent.
The region’s internet economy could be worth more than US$200 billion by 2025, with e-commerce seen as the fastest-growing segment. Along with an expanding middle class, this segment is predicted to rise at 30 per cent in the next five to 10 years to reach $88 billion by 2025, according to a Google-Temasek study.
As internet companies developed their presence rapidly in the region in the last decade, e-commerce firms in particular have flourished in the past two years.
The biggest global technology companies like Alibaba, Facebook, and Google each occupy a total of 20,000-50,000sq.m spread across three to five cities.
Many of these companies have increased their headcount by 30-50 per cent annually over the last five to 10 years, the report said.
Separately, co-working and flexible workspace operators have also contributed to the region’s office demand. Flexible workspaces have climbed by an estimated 40 per cent annually in the last three years and now take up 2 per cent of office stock in the region, compared with 0.5-1 per cent in 2015.
“We think in the next decade e-commerce companies will continue to grow, together with flexible workspace and co-working operators,” Lim said.
“As e-commerce firms spread their footprint, we predict that gaming and e-sports platforms may become the next driver of office occupancy in Southeast Asia.”
According to JLL, the acceleration in office take-up by technology firms in the last three years has occurred mainly in Jakarta, Bangkok, Manila and HCM City. — VNS