Southeast Asia is expected to be the fastest growing internet market in the world¹. The number of internet users in Southeast Asia is expected to grow by 14% CAGR to 480 million by 2020, faster than India or China. Strong socio-economic trends underpin the growth of the online economy, which is expected to grow by four times to USD 200 billion by 2025.

To tap on this potential, technology companies have been growing rapidly in Southeast Asia and accelerated their expansion in the last three years. Hardware manufacturers have been operating in Southeast Asia for decades. In the last ten years, internet companies started to enter the region and in the last two years, e-commerce companies started to expand rapidly. We think in the next decade, e-commerce companies will continue to grow, together with flexible work spaces and coworking operators. Gaming and e-sports platforms may become a source of future growth.

Our recent note outlines how technology firms are transforming Southeast Asia’s office landscape. Technology companies have become a key office occupier in Southeast Asia, taking up 15-20% of total gross office leasing volume compared to 5-10% just three years ago. We continue to expect technology companies to take up 15-25% of gross office leasing volumes and Southeast Asia office demand to grow 6% annually for the next decade.

Figure 1: Where are the largest technology companies in Southeast Asia?
Source: JLL estimates

The top five technology companies with the largest footprint in Southeast Asia (Alibaba, Facebook, Google, Sea and Wework) each currently take up between 20,000 to 50,000 sqm of office space in total in Southeast Asia, spread amongst three to five cities. In many cases, they have increased their headcount by 30-50% CAGR over the last 5-10 years. While most have a regional headquarters in Singapore, e-commerce companies also take up significant office space to serve the large domestic consumer markets of Indonesia, Thailand and Vietnam.

Regionally, technology companies’ city preferences are influenced by access to talent pools, supportive government policy and access to customers. These provide for an innovative eco-system conducive for collaboration and start-ups. Singapore stands out as a key global hub due to its transparent and consistent rule of law, open-sourced digital trade environment and the strong government funding for research and innovation. JLL’s China12 report also found that Singapore is the top destination for expansion by Chinese technology companies, beating Silicon Valley, Seoul and Tokyo.

Within each cities, we find that technology companies emphasize the need for transport connectivity, integrated developments incorporating live, work and play elements and building prominence and signage. Due to expansion and technology needs, these companies are often the earliest tenant to pre-commit to brand new buildings.

Flexible office spaces in Southeast Asia have grown by c.40% CAGR in the last three years and now take up 2% of office stock, compared to 0.5-1.0% in 2015. The largest stock of flexible work space is in Singapore, followed by Manila and Jakarta. JLL predicts that as much as 30% of corporate portfolios could be flexible space by 2030.

¹ According to the “e-Conomy Southeast Asia Spotlight 2017” report by Google and Temasek

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