CDL buys 24% stake in China co-working space operator Distrii

Singapore

SINGAPORE-LISTED property group City Developments Limited (CDL) has signed an agreement to invest 72 million yuan (S$14.8 million) for a 24 per cent stake in Distrii, an operator of co-working spaces in China.

Distrii, making its first foray outside China, will be leasing more than 60,000 square feet of space at CDL-owned Republic Plaza Tower 1 in Singapore's Central Business District.

The Singapore space for Distrii is expected to be one of the largest co-working spaces in the Republic. It will integrate food and beverage, entertainment, recreational and office facilities and is expected to open in the first half of 2018 as the space is still currently leased out.

Founded in January 2016, Distrii already has capacity for more than 2,200 members across nine locations in Shanghai, with 80 per cent of this capacity being taken up already. "With the rising popularity of co-working facilities in many urban centres, Distrii will be opening a new facility in Beijing in the first half of 2017 and plans to further expand in this city as well as in Guangzhou, Shenzhen and other global gateway cities," said CDL.

In 2016, before its joint venture with CDL, Distrii secured an angel investment from an investment arm of Huazhu Hotels Group. Nasdaq-listed Huazhu owns and operates more than 3,000 hotels across 350 cities in China.

With CDL's entry, half of Distrii's registered capital would be held by the investment entity of Distrii's founder team, controlled by Distrii CEO Hu Jing. The remaining 26 per cent would be held by an investment arm of Huazhu.

Users of Distrii's co-working spaces include start-ups, small businesses, freelancers, independent contractors and frequent business travellers seeking to rent furnished and equipped spaces. In addition to working alongside industry professionals and counterparts, users are invited to networking events organised by the operator.

CDL deputy CEO Sherman Kwek said: "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. Our investment in Distrii enables us to immediately gain entry into the sector and will contribute to CDL's long-term recurring income streams."

Mr Jing said: "The strong growth of the co-working spaces sector is expected to continue as companies and employees require more flexibility for their workspaces. In particular, for major cities in China and Asia, the start-up boom is a key factor for the rapid growth of co-working spaces."

CDL shares closed three cents up at S$8.87 on Thursday.