How CapitaLand Limited Is Gearing Towards the Future Office Trend

Commercial tenants are no longer only looking for conventional office spaces for their businesses. Co-working spaces are increasingly becoming the norm in the commercial real estate market. To tap on to the growth of the co-working space, property giant, CapitaLand Limited (SGX: C31), recently announced that it is embarking on a new strategy.

CapitaLand’s “office of the future” strategy, as it is called, involves combining a building’s conventional office space (core) and flexible space (flex) to create innovative workplace solutions. For the flexible space, co-working space is one of the types. With this new core-flex offering, tenants can have the flexibility to change their requirements as they wish.

Capital Tower and Asia Square Tower 2, which are under CapitaLand Commercial Trust (SGX: C61U), will be the first two commercial buildings here to offer the new core-flex model. CapitaLand has a stake of around 31% in CapitaLand Commercial Trust, as of 26 February 2018.

In line with its “office of the future” strategy, CapitaLand invested S$27 million for a 50% stake in co-working operator, The Work Project.

The flexible spaces at Capital Tower and Asia Square Tower 2, and The Work Project’s current offerings in Singapore and Hong Kong, will be initially available to complement CapitaLand’s core-flex offerings. As The Work Project grows in Asia-Pacific, more flexible spaces will be added to the mix. The Work Project’s growth is not limited to CapitaLand’s existing properties.

Lucas Loh, CapitaLand’s president for China and investment management, commented:

“As the global workforce becomes more mobile and the demand for flexible work arrangements rises, office tenants require dynamic work spaces and customer-centric workplace solutions that promote productivity, improve staff retention and encourage an innovation culture.

To build our ‘office of the future’ ecosystem, CapitaLand is going beyond traditional property management to providing more value-add services and community experiences for our office tenants. We believe this strategy will serve as a key differentiator from other office landlords and ensure that CapitaLand’s workplace offerings continue to be conducive for and complementary to tomorrow’s consumers and economy.”

Fit-out work for the new offerings at Capital Tower and Asia Square Tower 2 is expected to be completed in the first quarter of next year.

The Foolish takeaway

CapitaLand has been at the forefront of tapping into new growth opportunities for its properties, be it retail or commercial. With its new core-flex offering, CapitaLand could have an advantage over its rivals in the office sector. At yesterday’s close, CapitaLand and CapitaLand Commercial Trust had price-to-book ratios of 0.74 and 0.96 respectively.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended units of CapitaLand Commercial Trust. Motley Fool Singapore contributor Sudhan P owns units in CapitaLand Commercial Trust.