Once considered a niche, co-working spaces are now integral to startup activity and attract new members for myriad reasons. The rise of hybrid work and cost-effectiveness are mainly driving the demand for co-working spaces in the Middle East, especially in the UAE and Saudi Arabia.

The UAE’s co-working spaces will expand in the next 12 to 24 months due to a surge in demand from startups, independent entrepreneurs, and small to medium businesses.

Haider Shah, director of operations and franchising at The Co-Spaces, which  recently launched WO-RK @Burjuman Metro in partnership with Dubai’s Roads and Transport Authority, says, “People are gravitating towards co-working spaces for several reasons that reflect changes in how we work and what people expect from their work environments.”

A notable surge in office rental rates is a major driver of co-working spaces. Office rents in Saudi Arabia’s major markets have surged due to strong demand driven by an influx of new foreign businesses, particularly in the premium segment.

In Riyadh, leasing rates for prime office spaces increased by nearly 24% in Q3 2023, with other cities like Dammam, Khobar, and Jeddah also seeing significant rises. As per a Strategy& report, there are approximately 40 co-working spaces in Saudi Arabia, such as The Space, SheWorks, Beehive co-working, and more, offering around 30,000 square meters of workspace, with the highest concentration of these spaces in the Riyadh and Makkah regions.

WHAT’S DRIVING DEMAND?

In the UAE, renting an office space of 1,864 square feet annually in Business Bay or Downtown Dubai can cost between $95,293 and $217,541.

Co-working spaces offer a cost-efficient alternative to running operations, setting aside the expenses of office bills and operational costs.

The modern co-working space offers a light, aesthetically pleasing environment with a co-working lounge, private offices, meeting rooms, a podcast studio, and a phone booth. “Our boutique private offices and dedicated desks have been very much in demand, so much so that we are converting our workout studio into three additional offices,” says Nikita Patel, co-founder of The Bureau. 

Convenience drives the demand for co-working spaces.

Launched as the first co-working space in a public transit system, WO-RK provides an eco-friendly option by encouraging public transport instead of commuting by car. Access to WO-RK is available with a $9 daily pass, and there are options for monthly, group, and office rentals.

“The space allows flexibility for individuals who had to commute for hours just to reach their offices. The space caters to drop-in users who might need a quick, professional environment for meetings, phone calls, or getting work done between appointments,” says Shah.

WO-RK was designed with the needs of mobile professionals in mind. It caters to freelancers, remote workers, and traveling professionals who prioritize flexibility.

WHO IS DRIVING DEMAND?

While demand is increasing, niche segments are witnessing an uptick.

“The sweet spot for office sizes is in the 3-4 capacity range, and we have a growing waitlist,” says Nikita.

“The reason for this upward trend is that people prefer fixed and dedicated areas, especially those with small to medium-sized businesses,” she says. Experts forecast that the UAE will host 1 million SMEs by 2030.

Further, there has been a massive influx of people to Dubai due to the easy company setup, and the introduction of the freelance visa. 

Another reason for this popularity is the ease and affordability. The Bureau’s offices start at $1,361 and are a plug-and-play solution. Their prices include utility, Wi-Fi, and furniture.

“We had three companies that rented our space for an event for the weekend. It is affordable, tech-savvy, and not as stuffy as a traditional hotel ballroom,” Nikita says.

“As companies adopt hybrid working permanently, they are looking at ways they offer co-working spaces to employees on remote days,” says Hamza Khan, co-founder and CEO of Letswork, a UAE-based coworking platform, with operations in Riyadh, Bahrain, Portugal, and Spain. 

Nikita noted a significant engagement from freelancers, corporate remote workers, entrepreneurs, and those seeking a community. She highlighted a surge in co-working memberships from SMEs over the past year. 

Furthermore, co-working spaces cater to a unique market segment of companies undergoing office renovations,  serving as temporary workspace solutions for up to a year.

FLEXIBILITY IS THE NAME OF THE GAME 

If necessity is the mother of innovation, co-working spaces across the region serve as a lesson in understanding customers’ needs and providing flexibility within cost structures for varying levels of budgets.

“We offer flexible team memberships to companies depending on their company size and usage needs,” says Khan. A team of ten working from Letswork’s spaces twice a week would cost approximately $1,048 per month, with the freedom to work from the entire network of 400+ spaces globally.

“With WO-RK membership, individuals have the flexibility, with multiple facilities at their fingertips. They can opt for a day pass, which gives them access to the workplace and facilities all day. We have weekly and monthly passes,” says Shah. For individuals looking for longer-term facilities, the space offers a 6-month to 1-year pass with an option to opt out anytime. In addition, there’s a dedicated desk option, and the company also provides offices within the co-working space for the annual lease. The one-year co-working space and the office space can be supplemented with an Ejari certificate if the individual desires.

This flexibility to use as you go is driving demand. Khan says he sees people flocking to these spaces because they provide a plug-and-play solution, low cost, and community networking opportunities.

“We have an offering for every price point and commitment level,” says Rhea Patel, co-founder of The Bureau. Day passes start at $32 plus VAT.

Accordingly, The Bureau offers a student membership at $136 plus VAT. “Home and office rents are rising across the city. With rent and high office setup costs, our bundled approach is often more financially appealing to customers,” Rhea adds.

MAKING WAY FOR MORE CO-WORKING SPACE

With more demand for flexible working arrangements, do co-working space providers have expansion plans for the months ahead? “We are already looking for suitable locations to expand in. Our primary focus will be expanding the network within other metro stations and other parts of the country,” says Shah.

In addition, they are seeking ways to scale a franchise structure, looking for suitable partners who might want to enter the co-working space as new entrepreneurs or businesses. 

Nikita and Rhea also have grand plans for The Bureau. “Since we opened our doors, the response has been overwhelmingly positive. In all honesty, the plan was never to have one location.”

“We are opening our second location at the Opera Grand Residences in Downtown Dubai in a few months,” Rhea says, adding plans to expand across MENA, and South Asia.

The combination of remote and hybrid work, market growth, profitability, and the ability to adapt to changing needs indicates that co-working spaces are a permanent fixture in the modern work landscape.

Shah says, “The shift has already started towards co-working spaces, and we will continue to see this shift as time progresses.”