Developers target China demand for co-working space

Developers target China demand for co-working space
15/12/2016 , by , in INTERNATIONAL

Real estate developers and financial investors are capitalising on fast-rising demand for leasing of “co-working” spaces in China, as Beijing encourages startups and small businesses in a bid to offset slowing growth at traditional industries.

Developers, including China Vanke, Soho China and Singapore’s CapitaLand, are renting out property space that hordes of self-employed persons or small-sized companies then share, company executives said. The lease deals with the startups are usually short-term and are done mainly through specialised operators.

Financial investors are also jumping in on the bandwagon, amid a growing belief that shared spaces deliver greater synergies by driving up innovation and productivity. Citic Capital, whose seven-storey shopping mall “Shanghai 189 Lane” is due to open later this month, will rent its top two floors to a co-working space operator.

“A new economy is here, we need to bring in different tenants … in the past the anchor tenant may be a gym, theatre or supermarket, but now it may be co-working offices,” Citic Capital’s head of real estate group Stanley Ching told.

Co-working’s popularity is helping developers and financial investors tap new revenue sources in China and cushion the impact of the softening retail and office property sectors as the world’s second-largest economy slows. But the highly cyclical nature of the startups business model also exposes them to new risks.

The number of co-working spaces in China has grown rapidly this year, with currently over 500 sites in Shanghai and Beijing alone compared to just a few in 2015, according to real estate services firm Jones Lang LaSalle.

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