Singapore is rapidly growing as a business hub, making it attractive for local startups and SMEs to kickstart their business and expansion plans into the region. According to the Startup Ecosystem Ranking 2015 report, Singapore's startup ecosystem is now ranked 10th globally, jumping seven places from 2012.
However, another trend that continues to rise in Singapore is the price of rental space. According to the "Office Space Around the World 2014" report, Singapore has one of the most expensive rental space markets in Asia with an approximate rental growth of 22 percent every year, making it difficult for expanding companies to find office premises that are affordable and also maintain a professional image.
As a result, organisations are looking into "out of the box" solutions to reduce operational costs. Alternative solutions such as virtual offices and coworking have gained popularity over the years with companies looking to expand with tight budgets.
Although Singapore continues to improve its startup ecosystem, the report also shows that talent is both hard to find and retain in Singapore. Talent gaps remain a constant challenge, more so when an organisation is on the verge of going global.
As businesses rapidly expand to overseas markets with headcounts spreading across different locations, organisations make use of virtual office solutions to remove the restrictions of a physical office establishment. Allowing businesses to reach out to a wider talent pool, hire talents from anywhere in the world whose skills and knowledge are best suitable for the role.
With tight budget constraints, startups and SMEs are exploring virtual office solutions as no costs are associated with office leasing, fit out bills, and any other hardware facilities, which constitutes a large part in a business' operating costs. The cost saved can be invested in other areas that contribute to business growth, such as attracting, training, and retaining talent.
The coworking concept is not just catching on in Singapore, but also other Asian cities like Bangkok and Seoul. The coworking trend originated from tech hubs like Silicon Valley and New York. Now, more than half of coworking spaces worldwide are located outside the United States, according to The Second Annual Global Coworking Survey.
There are many reasons why the coworking trend has been such a success in Singapore. According to CBRE, Singapore is ranked 14th most expensive in the world to rent office space, making it extremely costly to rent a space. While renting an office, users can fork up a bill of a few thousands compared to a desk at a coworking space which starts significantly lower and comes with far fewer overhead costs and more flexible lease options.
In addition to the obvious benefit of office rent reduction, coworking spaces can offer a networking platform among similar-minded employees who can not only share ideas off each other but also associate with a similar set of entrepreneurial values which creates a working community of people with a common goal.
In Singapore, the trend is set to rise even more, with more people jumping at the opportunity to be their own boss, manage their own schedule, while meeting people from various industries and cultures.
In the near future, people may have a completely different view on a 'workspace'. Virtual offices and coworking will definitely gain popularity in the next few years as more and more companies will find themselves considering both flexible and alternative office solutions for their workspace planning.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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