Serviced Office Growth to Double in Emerging Markets by 2018

Instant Offices has recorded further growth of the serviced office sector in emerging markets, and predicts that the industry will more than double in size within the next five years.

The Emerging Markets Serviced Office Review 2013 from Instant Offices, a UK-based flexible office brokerage firm, has recorded significant growth of the serviced office sector in the emerging markets. On a worldwide scale, the sector has grown by 1.25% over the previous year and now represents 12% of the global market.

According to Instant's statistics, using the number of new serviced office centres as an indicator, the serviced sector has grown by 21% over the past 12 months with the addition of 124 new business centres.

It defines emerging markets as those that are experiencing rapid economic growth and industrialisation, and takes data from 59 countries in Latin America, Africa, and portions of Asia, Europe and the Middle East.

As of September 2012, Instant found that there are a total of 714 centres in 110 cities throughout these markets.

Using the number of new centres in each of the four regions as an indicator of growth, the report shows that Latin America's emerging markets recorded the largest growth rate with an increase of 38% over the last 12 months, led by Mexico City which expanded by 32%. Sao Paulo and Monterray are currently within Latin America's top three biggest serviced office markets.

Emerging markets in Asia saw 22% growth (64 new locations), bringing its total number of business centres to 313, with the largest growth seen in Shanghai. Africa recorded a growth of 19%, bringing its new total to 88 centres, followed by Europe and the Middle East which recorded 10% growth - a total of 153 centres. Istanbul is currently the largest serviced office location in the Europe and Middle East sector, which has doubled in size over the past two years.

Each sector has shown positive growth over the past 12 months, and Instant forecasts that this is set to continue - predicting that over the next 5 years, the number of centres in the emerging markets will more than double.

Serviced Office "pioneers"

The rate of growth shows that there is significant demand for locations within these emerging markets. Instant concede that there is a "push" for serviced office providers to be among the first pioneers to establish themselves in these locations, ahead of anticipated demand, while balancing the level of associated risk.

The report states that while there is "significant risk" in being a serviced office pioneer in emerging markets, the providers that do are often able to command higher workstation rates.

"Due to the complexities of unfamiliar laws and cultures, companies and individuals with a keen understanding of the local market have been some of the first to establish serviced office centres," it added.

The data shows that large, established providers like Regus, Servcorp and The Executive Center are often the first to enter these markets, and remain the key players.

Growth of Emerging Markets

While the definition of "emerging markets" is open to interpretation, the World Bank predicts that the economies of Brazil, Russia, India, China, South Korea and Indonesia will account for more than half of the world's total GDP growth by 2025.

For businesses looking to tap into these high-growth areas, the provision of serviced and flexible office space in key locations - such as those outlined in this report - would undoubtedly provide a highly beneficial and supportive platform from which those companies could seek to become established.

Click here to read the report in full.