Finance sector urged to turn to flexible workspaces for rental savings

Real estate costs accounted for up to 14% of the sector’s aggregate operating costs.

Flexible workspaces, which accounted for 2-5% of Grade A office space in Hong Kong, Tokyo, Singapore and Shanghai in 2018, can help reduce real estate costs for the finance sector which holds the distinction as the largest tenant in the region’s CBD, according to a report by Colliers International.

Rental expenses and property maintenance, repair and related expenses, amounted to 5% to 14% of aggregate operating costs for the finance sector.

The sector has also been said to be facing pressures including persistently low interest rates, technological change like the spread of new payment systems, and a high regulatory and compliance burden.

A flexible workspace will also account for the volatility of future headcount needs in the sector. Large Asian banks with consumer and small business operations could potentially cut branch and staff numbers by 20-35% over the next five years due to shifts to online service and automation.

Colliers also suggested the use of cloud-based technology, which can reduce the space and resources they need to run tech infrastructure in the near term.

In addition, the low interest rates meant that owning buildings has become cheaper for companies rather than leasing. Large financial occupiers has been noted to be trending towards owning 30% of its occupied space.