Growth of Coworking Spaces in Vietnam
The number of coworking spaces in Vietnam rose by 62 percent in 2017, driven by the growth in startups, and the need for cost-effective spaces compared to existing leased office spaces. The growing demand has only attracted domestic firms but also global firms and investment funds in Vietnam. Going forward, such spaces will continue to expand in terms of supply and offerings and will not only attract startups as tenants but also small corporations who are looking to minimize costs and increase flexibility.
Coworking spaces in Vietnam
Number of spaces
Currently, the demand for coworking spaces in Vietnam is driven by startups, freelancers, and small corporations. There are 19 co-working spaces in Hanoi and 15 in Ho Chi Minh City, with more than 23 operators, including two overseas. The number grew by 62 percent in 2017 compared to 2016 and has grown 55 percent annually in the last five years. By the end of 2018, the number of spaces will increase to 45, with Hanoi and Ho Chi Minh City accounting for 56 percent and 44 percent respectively. Toong is Vietnam’s largest co-working space operator. Other operators include UP, Circo, and Dreamplex.
Around 55 percent of the tenants are in the IT industry, while tourism, F&B, education, marketing, and real estate account for the remaining share. About 91 percent of the users of coworking spaces are below the age of 35, much higher than the global average of 67 percent. Startup founders account for 54 percent of the users, while freelancers and self-employed only account for 14 percent.
Coworking space rents do not depend on the area of the office but on the requirement of the tenant. Spaces in Vietnam are priced much lower than other cities in Asia-Pacific and are charged based on the requirements and the number of seats or desks, rather than the office area. Rent is charged on a daily or monthly basis for flexible desks, and monthly for fixed desks and private offices.
The major source of revenue for coworking space operators is rent. Additional sources of revenue include food and beverages, internet connection, and consulting services which are provided to the tenants.
To keep prices low, coworking spaces are usually not located in prime locations but are found mostly in underutilized buildings in decentralized areas, around central business districts.
According to a CBRE survey, 32 percent of the respondents in Vietnam selected flexible working hours as the most important factor for choosing coworking spaces. Such spaces also allow startups to connect with investors and other firms while keeping costs to a minimum. With over 90 percent of firms being small to medium-sized enterprises in Vietnam and more than 30 percent of the workforce under 34, coworking spaces offer the most cost-effective solution for entrepreneurs and startups.
ASEAN coworking spaces
The growth in coworking spaces is not confined to Vietnam in the region. Countries such as Singapore, Thailand, Malaysia, and Indonesia have witnessed similar growth in the sector. According to Cushman and Wakefield, by 2030, 15 percent of the total office supply in Southeast Asia will be flexible workspaces.
The region benefits from increased connectivity among member states and firms can have access to a diverse talent pool across the region, and by using coworking spaces, they can keep the costs to a minimum.
In the future, the coworking space sector will continue to expand in Vietnam. Smaller operators will face increased competition from bigger real estate firms and global coworking space operators. This will lead to consolidation and an increase in M&A activities, which will increase the quality of infrastructure and services provided by of the operators. Tenants will not be limited to startups or freelancers in the future and will attract smaller and foreign-invested firms who want to minimize their costs and are looking to establish a foothold in the market.
Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.
Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.