Why co-working spaces could be the future in Saudi Arabia

Research says requirements of workplaces in the kingdom have moved from traditional office spaces to a more flexible environment
Why co-working spaces could be the future in Saudi Arabia
Co-working concept Ouspace by Kerten Hospitality has launched in Jeddah with plans to also open in Riyadh.
By Sam Bridge
Sat 10 Aug 2019 12:25 AM

As Saudi Arabia’s economy continues to diversify and transform, its workplace needs are shifting and more co-working spaces will be required, according to new research.

A joint study conducted by Monsha’at and Strategy&, part of the PwC network, said the requirements of workplaces in the kingdom have moved from long-term commitments in traditional office spaces to a more flexible, but sophisticated working environment, such as co-working spaces.

Earlier this week, Kerten Hospitality announced the launch of its Ouspace concept in Jeddah with plans to open in Riyadh and Dubai in the future.

Increasing the provision of these spaces – where freelancers, entrepreneurs, small and medium-sized enterprises (SMEs) can share offices and services – presents a major opportunity for investors to convert some of the country’s available commercial properties into environments in which companies of all sizes can thrive, the report said.

The study highlighted that despite growing demand for co-working spaces in Saudi Arabia, their availability is limited and rents are relatively high. Co-living projects, a relatively new concept in the Gulf region, offers common spaces to socialise and interact.

This is in stark contrast to the global co-working market, which has grown steadily for the past decade and in which growth is now accelerating.

The rise of co-working spaces globally has been primarily driven by technological advances, economic interest, as well as factors such as improved internet connectivity, reliability, speed, and access to cloud storage, which has eroded the need for a custom office, the report added.

Hilal Halaoui, partner with Strategy& Middle East, said: “The number of global co-working spaces has doubled in the past three years, and the number of people who use them globally has tripled. This demand for more modern workplaces is also being seen across the kingdom, resulting in the workplace transforming from traditional to sophisticated.

"There is still a large supply shortage, however, and it is estimated that there are 3.4 co-working spaces in Saudi Arabia for every one million workers, compared to 32 for every million workers in the United States.”

Globally, almost two-thirds of those using co-working space are younger than 40 years of age. In Saudi Arabia, more than half of the population is under 40 years old, which is precisely the demographic that wants co-working spaces.

However, the supply shortage of co-working areas in Saudi Arabia means that major cities in the kingdom command rates that are among the highest globally, disproportionate to those cities’ commercial real estate rental prices, the report noted.

Rabih El Chaar, principal with Strategy& Middle East, said: “If Saudi Arabia is to provide more co-working space, it will have to encourage investors to found partnerships with relevant stakeholders and promote investment”.

To tackle this challenge, Monsha’at, a government body that supports, develops and nurtures the SME sector, said it is actively collaborating with organisations in the public sector as well as the private sector to support and improve co-working spaces on a number of fronts.

Mohammed A Alariefy, general manager of entrepreneurship planning at Monsha’at, said: “We have identified the challenges of establishing co-working spaces in the kingdom, related to management capabilities, design, service quality, awareness, funding, and information. Investors who can overcome these challenges can help to address the urgent need for more co-working spaces and potentially benefit financially.”

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