Emerging markets serviced office review 2013
A comprehensive review of the serviced office sector in the world’s emerging markets.
The phrase “emerging markets” typically refers to a country with an industry or economy that is rapidly growing and advancing. Most of these places fall under the category of “developing” nations. Emerging markets are an attractive prospect for investors due to their fast growth.
ChinaAccording to Instant’s Head of Portfolio Services, Branton Moore, China is the country to watch when it comes to future growth in the serviced office and executive suite market. With continued economic growth and development, the country is a popular solution for multinational corporations requiring regional headquarters. Indeed, any business with a global focus will likely have China on their radar – whether for the production of goods or as a vast new market to sell into. The process of setting up a new business in China can be challenging, and serviced offices can remove some of the complexity of leasing and fitting out conventional office space – ideal for newcomers in the region.
Africa
Africa is another region to keep an eye on over the next few years. Apart from South Africa, the concept of serviced offices is still a relatively new idea. However, it is slowly starting to catch on in cities across the continent, and serviced office operators are increasing their presence in the region. According to Branton, most of the recent growth has occurred in Sub-Saharan Africa. Lagos, Accra and Nairobi have recently increased the number of serviced office centres, while Kampala, Kigali and Lusaka are just beginning to see serviced offices opening.
South America
A market with great potential is South America. Currently, the region is dominated by one main serviced office provider, which means that competition is limited. As such, the concept has yet to catch on and many businesses stick to traditional, leased, property solutions. The serviced office market in South America can take off, however, if other serviced office providers begin operating in the region. This has happened in Mexico; initially, the country was dominated by one service provider, but then a number of local providers began offering ready-to-go offices in the area, which lead to increased competition and rates that were achievable and realistic for the local market. Serviced offices in South America can be found in cities such as Sao Paulo, Lima and Rio de Janeiro.
Let’s take a look at some key facts:
- In the past two years, from July 2011 to July 2013, 124 new office centres were added to Instant’s portfolio, a growth in the emerging markets of 21% leading to a combined total of 714 commercial office developments. More specifically, this office space growth occurred in 101 cities, in 59 countries around the world.
- It is calculated that the serviced office market will double in growth in the next 5 years. Across the various regions, growth in the past 2 years has been as follows: Latin America – 38%, Europe and the Middle East – 10%, Africa – 19% and Asia – 22%.