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 valued at more than USD1 billion.
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 Asia—now home to at least 10 unicorns—has attracted USD2.62 billion in VC commitments for startups.
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. “Asia Pacific has in its artillery a range of business and science parks suitable to house tech companies,” says Ada Choi, head of occupier research for Asia Pacific at CBRE.
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 (“cyber citadel” in Bahasa), a 2,800-hectare integrated city anchored on a science park. Although brimming with attractive tax breaks and rental rates, Malaysia’s bid to become the Silicon Valley of the East ultimately floundered as high-value firms preferred central Kuala Lumpur.
“Effective interface between tech companies and the property sector has not reached a desirable level in Malaysia,” says Prem Kumar, executive director of Jones Lang Wootton. There is, however, “tremendous potential to explore real estate opportunities that will enable tech companies to further streamline operational costs.”
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.
A similar trend is evident in Indonesia, which hosts five unicorns— the most in Southeast Asia. In South Tangerang, developer Sinar Mas Land is building Digital Hub@BSD City, a 26-hectare “knowledge campus” positioned as the “Silicon Valley of Indonesia.”
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December 2019 - January 2020