City Developments Ltd (CDL) has joined the China co-working race with a RMB 72 million investment ($10.5 million) in Shanghai-based Distrii, according to a recent announcement by the Singapore-based developer.
CDL’s cash buys it a 24 percent stake in Distrii, which already operates nine co-working centres across Shanghai, totalling 2,200 desks. With this new cash in hand, the one year-old shared office provider says it is now aiming to open new locations in Beijing and Singapore during the first-half of this year, with an eye to further expansion in other cities in the region.
The investment would give CDL, which is a major commercial landlord in Singapore, the opportunity to gain a greater slice of the tenant kuai, dollars and baht currently flowing to a range of shared office providers in the region. “In line with CDL’s strategic diversification, we have been actively looking for innovative offerings and new growth platforms that are complementary to our core businesses of real estate and hospitality,” CDL Deputy Chief Executive Officer Sherman Kwek commented in a statement.
Mainland Co-Working Market Attracts More Investment
Part of a crowded mainland co-working market, CDL and Distrii will be hoping that the investment helps the Shanghai player keep pace with increasingly well-funded competitors. Earlier this month, former Vanke executive Mao Daqing’s URWork raised $58 million from a consortium of investors that included Alibaba affiliate Ant Financial.
Also, planning a rapid expansion in the region is Shanghai-based naked Hub, which in November received $33 million in a round of funding that featured Hong Kong’s Gaw Capital, and has announced plans for its own expansion into Hong Kong and other regional cities in the coming months.
Co-working pioneer WeWork has also been expanding its footprint in China, with founders Adam Neumann and Miguel McKelvey visiting Shanghai in November to officially launch the office-sharing company’s mainland flagship location.
Distrii was founded in January 2016 by former Greenland Holdings chief architect and executive vice president, Dr Hu Jing. The startup received an unspecified amount of funding early last year from an investment arm of Ctrip co-founder Qi Ji’s NASDAQ-listed Huazhu Hotels Group (Huazhu).
Distrii to Open 5,600 SQM Singapore Centre
CDL sounded optimistic on the potential upside for co-working in the region. “With the burgeoning sharing economy, an increasingly mobile workforce and a greater requirement for flexibility, we see strong potential in co-working spaces and the demand for them has been rapidly growing,” Kwek said. “Our investment in Distrii enables us to immediately gain entry into the sector and will contribute to CDL’s long-term recurring income streams.” In addition to its upcoming centres in Beijing and Singapore, CDL says Distrii will be expanding into Guangzhou, Shenzhen and other global gateway cities.
The agreement between CDL and Distrii also appears to include space in one of the developer’s prime buildings in Singapore. The co-working operator will lease more than 60,000 square feet (5,600 square metres) of space at CDL-owned Republic Plaza Tower 1, a prime Grade A office building connected to the Raffles Place MRT Station in the heart of Singapore’s Central Business District, according to CDL’s announcement.
When it opens, the two companies expect Distrii’s new co-working space to be among the largest in Singapore, integrating food and beverage options, entertainment, and recreation with office facilities.