![\"\"](\"https:\/\/www.asiapropertyawards.com\/wp-content\/uploads\/2019\/12\/a-basket-full-of-apples-for-web-157.jpg\")
<\/p>\nInnovation ecosystems, tethered to snazzy tech parks and science campuses, are sprouting across ASEAN in hopes of emulating the success of the Californian region<\/p>\n
<\/p>\n
For decades, scores of Asian cities have tried to ape Silicon Valley and its ability to lure technology leviathans like Apple, Facebook, and Google. By agglomerating information technology companies in a designated area, imitators hope to fill offices, if not breed the next blessing of unicorns, i.e. startups
\nvalued at more than USD1 billion.<\/p>\n
Vast infusions of venture capital (VC) have sparked startup culture across a region where Silicon Valley wannabes show great potential to one-up the original. In the first seven months of 2019, Southeast\u00a0Asia\u2014now home to at least 10 unicorns\u2014has attracted USD2.62 billion in VC commitments for startups.<\/p>\n
CBRE data reveal tech companies account for 23 percent of total leasing activity in Asia Pacific in 2018, with over eight million square feet of headquarters constructed in the last two years. \u201cAsia Pacific has in its artillery a range of business and science parks suitable to house tech companies,\u201d says Ada Choi, head of occupier research for Asia Pacific at CBRE.<\/p>\n
Malaysia was among the first in the region to exploit the idea of building a startup ecosystem from scratch. In 1997, the Mahathir Mohamad administration launched Cyberjaya (\u201ccyber citadel\u201d in Bahasa), a 2,800-hectare integrated city anchored on a science park. Although brimming with attractive tax breaks and rental rates, Malaysia\u2019s bid to become the Silicon Valley of the East ultimately floundered as high-value firms preferred central Kuala Lumpur.<\/p>\n \u201cEffective interface between tech companies and the property sector has not reached a desirable level in Malaysia,\u201d says Prem Kumar, executive director of Jones Lang Wootton. There is, however, \u201ctremendous potential to explore real estate opportunities that will enable tech companies to further streamline operational costs.\u201d<\/p>\n A 1,100-acre property in Negeri Sembilan, for one, is being developed into Sendayan TechValley, with tenants being lured by government with short-term leases, staggered payments, business grants, and tax exemptions.<\/p>\n A similar trend is evident in Indonesia, which hosts five unicorns\u2014the most in Southeast Asia. In South Tangerang, developer Sinar Mas Land is building Digital Hub@BSD City, a 26-hectare \u201cknowledge campus\u201d positioned as the \u201cSilicon Valley of Indonesia.\u201d<\/p>\n In the past, oil and gas companies and financial institutions were large occupiers of offices<\/span><\/span>; n<\/span><\/span>ow they<\/span><\/span>\u2019<\/span><\/span>re facing a downsizing situation. On the other hand, tech companies<\/span><\/span>, which<\/span><\/span>\u00a0<\/span><\/span>started<\/span><\/span>\u00a0small,<\/span><\/span>\u00a0are now\u00a0<\/span><\/span>becoming the anchor tenants<\/span><\/span><\/p><\/blockquote>\n Currently, tech firms are scattered throughout Jakarta. \u201cWe don\u2019t have a \u2018Silicon Valley\u2019 per se, but the oversupply situation of the office market has brought the rental rate down quite significantly. Tech companies can easily go and rent office space anywhere in the CBD,\u201d says Bagus Adikusumo, senior director of office services at Colliers Indonesia. Inspired by Jakarta\u2019s success as a unicorn stable, Yogyakarta is proposing to convert two districts into a \u201cdigital valley\u201d, emphasising lower living costs and cheaper labour than the capital.<\/p>\n Tech companies are usurping traditional industries in terms of office occupancy across ASEAN. \u201cIn the past, oil and gas companies and financial institutions were large occupiers of offices in Jakarta; now they\u2019re facing a downsizing situation. On the other hand, tech companies, which started small, are now becoming the anchor tenants,\u201d says Adikusumo.<\/p>\n In Bangkok, tech companies represent 31 percent of the total space CBRE Thailand leased last year, compared with just nine percent in 2017. \u201cThere\u2019s been almost a 300 percent increase year-on-year [in leasing space per square metre] for technology companies.<\/p>\n The share of finance companies declined significantly from 18 percent in 2017 to three percent in 2018 and continues to decline this year,\u201d says Roongrat Veeraparkkaroon, head of advisory and transaction for office services at CBRE Thailand.<\/p>\n The cradle of ride-hailing giant Grab\u2014Southeast Asia\u2019s only decacorn or startup valued at more than USD10 billion\u2014Singapore is now home to 80 of the world\u2019s top 100 tech firms.<\/p>\n KPMG reports around 59 percent of international tech companies in Asia Pacific have regional headquarters in Singapore, while a Preqin study states that, of the USD14.9 billion in VC inflows to Southeast Asia between 2010 and 2017, around 67 percent went to Singapore-based startups.<\/p>\n Unsurprisingly, Singapore\u2019s tech parks remain highly occupied, with Mapletree Business City and Onenorth keeping vacancy rates less than five percent by end of 2018.<\/p>\n In February, the finance ministry announced an increase in tax deduction rates for research and development (R&D) expenses incurred by companies, an audacious step for a city already world-famous for low corporate tax rates. \u201cPeople like to invest in Singapore\u2019s properties because there\u2019s zero capital gains tax for\u00a0property investment, high quality of life, and a pro-business environment,\u201d says Christine Sun, head of research at the consultancy OrangeTee & Tie Pte Ltd.<\/p>\n More: Strong and stable Singapore courts attention of HNWIs<\/strong><\/a><\/p>\n Like Bangalore, a city often branded as the Asian Silicon Valley, Manila is a global outsourcing hub. President Rodrigo Duterte recently imperilled this status by signing in June a directive banning the creation of new ecozones in the capital\u2014a bid to promote less popular Filipino hubs like his hometown Davao, the nation\u2019s so-called \u201cSilicon Gulf\u201d.<\/p>\n \u201cThe main threats to the ITBPM (Information Technology and Business Process Management) sector are the continuous delays in proclamations\u00a0of ecozones by PEZA (Philippine Economic Zone Authority),\u201d says Monique Pronove, CEO of Pronove Tai International Property Consultants.<\/p>\n More than ease of doing business, a large talent pool captivates tech firms the most, note CBRE analysts. But talent, while relatively cheap, can be sorely lacking in would-be ASEAN Silicon Valleys. Asia Pacific is home to 8.4 million Science, Technology, Engineering and Mathematics (STEM) graduates, yet 50 percent and 30 percent of them are in China and India, respectively.<\/p>\n Last year, only around 290,000 professionals worked in Vietnam\u2019s tech industry. \u201cThis is relatively low and certainly not up to par for tech companies. While Vietnam has become an investment destination of tech giants such as Samsung and LG, the lack of human resources can become an obstacle to attracting In the second quarter of 2019, the IT sector accounted for approximately 26 percent and 20 percent of office market demand in Hanoi and Ho Chi Minh City, respectively\u2014up from 18 percent for both cities in 2018. The flexible workplace model intertwined with startup culture has significantly expanded over the past three years.<\/p>\n \u201cThis model, of which the total office supply is expected to double in both cities by year-end, allows startups to collaborate, improve productivity, and seek investment opportunities,\u201d says Hang Dang.<\/p>\n \u201cHi-tech parks\u201d have been on the upswing in Hanoi, Ho Chi Minh City, and Danang. Last year, the Vietnamese capital certified 10 such projects, worth a combined VND78 billion and spanning 365 hectares, compared with just 11.7 hectares across three projects worth VND5 billion in 2017.<\/p>\n More: A leading Singapore architect shares his designs for life<\/strong><\/a><\/p>\n The proliferation of these hi-tech parks in Vietnam foreshadows the larger trend of ASEAN governments coming to the succour of the tech sector. In early 2019, Vietnam launched the Made in Vietnam 4.0 programme promoting tech industries and issued Decree No. 13\/2019\/NDCP giving scientific and tech enterprises a raft of tax and credit incentives as well as exemptions and reductions on land and water fees.<\/p>\n \u201cTo increase the appeal of cities, governments can engineer tax rates and foreign investment rules to greater investment. This, paired with seamless access to funding, will start a cycle where there are more market participants and thus greater competition,\u201d notes Choi.<\/p>\n Southeast Asia has yet to truly duplicate the Silicon Valley story. At the rate tech hubs are growing in the region though, who\u2019s to tell when Cyberjaya and its ilk will be as much of a byword for innovation as Cupertino?<\/p>\n This article is the third in a five-part series. It originally appeared in Issue No. 157<\/a>\u00a0of\u00a0PropertyGuru Property Report Magazine<\/a>. Read the first<\/a>, second<\/a>, fourth<\/a>, fifth<\/a> parts here<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" There may not be a Silicon Valley equivalent in Southeast Asia (yet), but tech parks are an increasing force in the world of real estate<\/p>\n","protected":false},"author":8,"featured_media":20407,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[81,97],"tags":[154,125,129,626,627,625,628,135],"class_list":["post-4636","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-in-depth","category-magazine","tag-indonesia","tag-malaysia","tag-philippines","tag-silicon-valley","tag-startups","tag-tech-hubs","tag-unicorns","tag-vietnam","news_country-asia","news_author-al-gerard-de-la-cruz"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/www.asiapropertyawards.com\/wp-content\/uploads\/2019\/12\/a-basket-full-of-apples-for-web-157-3.jpg\")
![\"\"](\"https:\/\/www.asiapropertyawards.com\/wp-content\/uploads\/2019\/12\/a-basket-full-of-apples-for-web-157-4.jpg\")
\ninvestment,\u201d says Hang Dang, managing director of CBRE Vietnam.<\/p>\n![\"\"](\"https:\/\/www.asiapropertyawards.com\/wp-content\/uploads\/2019\/12\/a-basket-full-of-apples-for-web-157-2.jpg\")
<\/a>\u201cThere should be more focus on education to meet tech talent demand, such as opening more tech-focused schools and actively and publicly providing training opportunities for future employees
\nwhile still in school,\u201d she adds.<\/p>\n