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(Bloomberg) – Tencent Holdings Ltd. has chosen a co-workspace for its first Singapore office, joining other Chinese tech giants in using the city-state as a launch pad in the rest of Asia.
The WeChat owner will have nearly 200 seats in JustCo’s co-working space at OCBC Center East in Raffles Place, according to people familiar with the plans, who asked not to be identified because the matter is private. The space amounts to 10,000 square feet (929 square meters).
The contract runs for one year, giving China’s largest video game and social media company flexibility to pursue a larger space as it adds staff, the people said. Tencent said in September that it would open an office in Singapore.
Representatives for Tencent and JustCo did not immediately respond to requests for comment.
The agreement paves the way for Tencent to make Singapore its beachhead to enter Southeast Asia. Bytedance Ltd., the owner of the popular video app TikTok, is also expanding its office space in the city-state, while Alibaba Group Holding Ltd. earlier this year bought a 50% stake in an office tower. from Singapore.
Read more: Tencent chooses Singapore as the center of Asia after India and US ban
Demand from Chinese tech companies could also boost Singapore’s office market, which has been hit by the coronavirus pandemic, with some companies canceling leases and landlords being forced to cut rents. Tech firms have occupied 350,000 square feet of office space in new leases and expansions this year, and that could increase to 400,000 to 500,000 square feet next year, estimates Cushman & Wakefield.
Singapore is considered an attractive base, providing a gateway to Southeast Asia’s population of 650 million smartphone users. It also offers relative political stability and developed financial and legal systems.
China’s tech giants are increasingly turning their attention to the region amid growing hostility from the United States and India. The Trump administration wants to remove WeChat from mobile app stores in the United States and impose other restrictions, although a court has blocked the move. India has banned the company’s hit games “PUBG Mobile” and “Arena of Valor”.
Read more: TikTok owner to spend billions in Singapore after US ban.
Choosing a coworking space gives companies “the advantage of being flexible in markets where workforce growth is unclear and there is the potential for the business to grow so fast that it runs out of space,” said Christine Li. , director of business research and development services for Southeast Asia at Cushman. It’s a common strategy for tech companies entering a new market, as Alibaba and Facebook did when they started in Singapore.
© 2020 Bloomberg LP
