By this time, there are 23 companies to run 19 coworking spaces in Hanoi and 15 in Ho Chi Minh City

Emerging from the year 2014, the coworking space companies (shared offices) quickly left the market quietly. Now, this market re-surfs as many potential names join. "In 2019, we will start looking for opportunities in Ho Chi Minh City," said Tran Xuan Kien, Chairman of CoGo Trading Services JSC. – the company owns CoGo Coworking space.

CoGo is a new name that has just joined the coworking space market with the founding team who established and operated Tran Anh consumer electronics stores. In the plan to the end of this year, CoGo will have five locations in Hanoi with a total floor area of 12,000sqm.

The second generation

According to CBRE's statistics, up to April 2011, there are 23 companies, of which five foreign companies participated to run 19 coworking spaces in Hanoi and 15 in Ho Chi Minh City. The coworking space demonstrates the attractiveness of the coworking space market in Vietnam. Over the past five years, the growth rate of coworking space in Vietnam has reached 55% per year.

There are some local players as Toong, Up, CirCO, Dreamplex… There also foreign entities such as Regus (UK), Hive (Hong Kong), CEO Suite (Korea), Klouds (Singapore)... are trying to increase the number of centers in Vietnam in recent years.

In both Hanoi and Ho Chi Minh City, coworking space tends to be concentrated in the suburbs of the city. In Hanoi, some recent coworking spaces have chosen their location in Dong Da, Cau Giay – new areas of offices and trade centers. In Ho Chi Minh City, the central districts such as districts 1, 2, 3, 4, Binh Thanh and Phu Nhuan are the preferred places of this business model.

The coworking space model appeared in Vietnam about four years ago with names as ClickSpace, Saigon Hub, Hatch Nest, 5Desire Coworking space, IT Hub ... with a growth rate of 300% per year but quickly slipped out and not many names remain.

The reason, according to Mr. Kien, is that the coworking business companies at that time did exploration only: each area is only about 500-700sqm, the offices are old buildings renovated and especially not enough sources. For long term investment, the coworking space model is unlikely to be profitable in the first two to three years

Meanwhile, an international standard coworking space needs an area of at least 2,000sqm to create a community, it is usually located in grade A office buildings, designed in an open style with aluminum-glass divider rooms. This design helps to create elegance and friendliness among the members in the coworking space. Running business in coworking space is not for those who want to find a profit in a short time.

As searches of Nhịp cầu Đầu tư, main reason is that the investor at that time selected wrong business concept. This is not a nursery garden. They expected to be able to attract potential startup companies, accepted to invest early and low cost rentals.

According to the first-generation coworking space runner in Vietnam, over 50% of their members are startup companies and freelancers. This group tends to move so it does not guarantee the revenue and initial expectations of the Vietnamese coworking space investors.

The second generation of coworking space companies has become more aware of this issue and has learned to adapt to international coworking space. They choose larger, more luxurious locations and flexible designs to meet the rental needs of a diverse range of customers, especially small and medium enterprises (SME).

WeWork is the world's No.1 coworking space which valued at $20 billion. WeWork representatives say that 30% of their revenue comes from big tenants, more than 40% of revenue comes from small and midsize enterprises, a 30% of turnover is come from startups and freelancers, so its revenue structure is more sustainable

In addition, the facilities included in the coworking space were also significantly invested and designed to serve the masses. The member can optimize costs included in the rental price including bar, printing, photocopying, reception, high speed internet, meeting room, office equipment ... "This way, the cost of renting in the coworking space is only equal to 50-70% of traditional office," said Mr. Kien.

Capture market share

91% of coworking space users in Vietnam are Y generation, who are under the age of 35. This percentage is higher than the world average of 67%. This figure also reflects the young population of Vietnam compared to many countries in the region. Therefore, CBRE predicts that in the next two years, there will be more coworking space names to join.

But, a barrier to join this model is like the battle of retail space. Who takes good locations, large area will have advantage. In addition, companies will strive to create a connection-oriented environment with a variety of activities to attract tenants, especially in the context of supply of Grade A office space is gradual scarce.

To date, Toong is occupying the largest market share. In April, this company opened their largest branch in Ho Chi Minh City with an area of over 1,700sqm. Toong also teamed up with the Swiss designer G8A Architects (predecessor Group 8) to renovate this location.

Founded in 2015, Toong has received strategic investment from Openasia Group, Indochina Capital and strategic partnerships with other companies such as CapitaLand, United Overseas Bank (UOB), IE-Singapore (International Enterprise Singapore) and Vanguard Hotels.

Mr. Do Son Duong, Managing Director of Toong, said that Toong's strength is its ability to attract young, income earners. The company has a lot of excitement in the areas where they set up offices. "This gives us a definite advantage in negotiating with building owners," Mr. Duong said.

According to CBRE analysis, Toong is increasingly more tenants, as each of their facilities are gradually different in design. CirCO is more specific when it comes to expanding its facilities in prime locations, making it easy to move to the downtown area to take advantage of the tenants' convenience of location

UP tends to attract relatively new startup companies, so they choose places that will have young startups. Therefore, UP cooperated with HCMC University of Technology to create a common working space and nursery business startup with legal support services and human resources.

For its part, CoGo is positioned as an international standard investment unit, with an average of 2,500sqm each and focusing on Grade A and B office buildings. Most of the small and medium companies operate in a stable manner so the style of office design is more professional than the style of coffee shops.

Mr. Kien said that thanks to the scale advantage, rent will be one of the strengths of CoGo, which is 20-30% below the common level. Mr. Kien expects the participation of more and more companies will attract more tenants moving from traditional office to coworking space.

"Currently, the coworking space market in Vietnam accounts for only 0.5% of the total office rental market, while in other countries in the region and in the world are 3-5% and is expected to account for 10-15% over the next five years", Mr. Kien said.

Nguồn : Báo nhịp cầu đầu tư