Strategy& outlines the potential of Saudi Arabia's co-working space

05 August 2019 Consultancy-me.com

As co-working pioneer WeWork prepares to launch its first location in the UAE, Strategy& takes a peek across the border at the promise and potential of the Saudi Arabian co-working market.

WeWork – one of the biggest co-working companies in the world with a base of 480,000-plus members and almost 780 locations across the globe – has just announced it will open its first Middle Eastern site in Abu Dhabi, with Dubai set to follow. According to a recent report from Colliers, the latter outlet will join 53 existing co-working locations in Dubai offering 650,000 square feet of flexible and co-working space – a 130 percent increase since 2015.

“The UAE’s capital city attracts innovative founders, established businesses, entrepreneurs and start-ups; the same type of people and businesses that call WeWork home around the world,” said Anthony Yazbeck, the managing director for international operations at WeWork, upon the firm’s recent announcement. But what of the landscape in neighbouring Saudi Arabia, one of the least densely populated countries on earth, with just 15 people per square kilometre?

Co-working space in Saudi Arabia compared to global hotspots

A new report from leading strategy consultancy Strategy& – compiled in conjunction with Monsha’at, Saudi Arabia’s General Authority of Small and Medium Enterprises – has delved into the ‘potential and promise’ of the Kingdom’s co-working scene, which, as it stands, features an estimated 40 locations in total – or, just 3.37 spaces per one million target workers. As a comparison, Australia – similarly sparse as to population – has close to 30 per head.

Population density of course has little to do with the global co-working phenomenon – with the number of shared spaces having doubled worldwide in the past three years, along with a tripling in membership – while urban crowding, and so affordability, is just one factor. More important is the technological boom, which has enabled remote connectivity, and the world’s shifting workforce trends, with flexibility and collaboration opportunities now more heavily in demand.    

Average commercial real estate vs co-working rates around the world

Indeed, that affordability may be down the list of motivations for co-working can be aptly demonstrated in Saudi Arabia, which due to its supply shortage commands rates for spaces that are among the highest in the world, and disproportionate to those cities’ commercial real estate prices. And this is despite often inconvenient locations, poor layouts, and underdeveloped services – just some the areas according to Strategy& that still need improvements.

“The creation of new co-working spaces is an exciting opportunity to open new ways of working in Saudi Arabia’s growing economy,” conclude the authors. “There is a young population that seeks opportunities, and prefers the affordability, flexibility, camaraderie, and support that co-working spaces offer. By working together, the regulator, public bodies, and the private sector can strengthen the co-working space sector and help to develop places where people will innovate and where the economy will diversify.”

Incidentally, WeWork’s largest investor is Softbank, which has injected more than $10 billion into the co-working company since 2017 and initially invested through its original Vision Fund –  primarily backed in turn by the Saudi Public Investment Fund (PIF). While declining tech stocks were cited for Softbank’s reversal on a further $16 billion plunge at the start of the year, The Wall Street Journal reported at the time that PIF was unconvinced by the company’s model and valuation.