Bengaluru, Singapore and Shenzhen best locations for tech enterprises in Asia: Study

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Bengaluru, Singapore and Shenzhen are the top three locations in Asia for starting or expanding technology operations, according to a report. Bengaluru tops the list at 67.9 percent, followed by Singapore and Shenzhen at 62.6 percent and 60.9 percent, respectively, says Colliers Research in its new report titled Top Locations in Asia: Technology Sector.

Another  Indian city, Hyderabad, ranks seventh on the list with 59.3 percent, the report states.

“Bengaluru has been chosen as the No 1 choice in Asia for Technology Occupiers. Bengaluru’s boost comes from the socio-economic strengths that have set it to be the fastest-growing in Asia with an average predicted annual GDP growth of 9.6 percent till 2022." said Joe Verghese, Managing Director, Colliers International India.

Bengaluru, dubbed Silicon Valley of India, offers technology occupiers ample space to house their operations. It has the largest office market in the country with a total Grade A stock of 141 million sq ft (13.1 million sq m) spread across multiple micro markets. In terms of Grade A office space, Bengaluru ranks as the second-largest urban office market in Asia after Tokyo.

In recent years, the IT sector has accounted for 60–70 percent of the gross absorption space in India. This proportion, however, has been slipping due to increased demand from other sectors, the report says.

With regard to the talent pool, Bengaluru remains the clear preference of most technology groups. Technology and related businesses accounted for 45 percent of total office leasing volume in the second quarter of 2018. Flexible workspace is the next in the pecking order at 26 percent of leasing volume, while engineering and manufacturing at 16 percent, and banking 11 percent.

As far as the property market is concerned, Bengaluru has some of the advantages including low employer costs and moderate staff costs and office rents.

While emerging cities offer high growth potential and low operating costs, they tend to score lower on employment criteria and human aspirational metrics. The city has a low cost of living but it scores less on measures of quality of office accommodation and quality of infrastructure.

The Colliers Research report is based on a comprehensive study of 16 cities in developed and emerging markets across Asia. The report examines nearly 50 criteria across a spectrum of socio-economic, property and human factors to determine the viability of these cities as tech hubs to determine a workability index for the tech sector.

Elaborating on Bengaluru's prospects and opportunities, "Further, it gets the natural benefit from a wide and deeply experienced talent pool. The city has the largest number of higher education institutions across India relative to its population with an employability ratio of 24 percent for the IT sector,” said Verghese.

The report says that modest long-run growth prospects hold down developed cities like Tokyo and Taipei for the sector.

As the natural hub for technology startups, Bengaluru has attracted the highest quantum of startup investments at an annual average of $4 billion over the last three years. The city clearly has an edge with the largest stock of Grade A office space in Asia after Tokyo, low employer costs (reflecting moderate staff costs and office rents) and is among the top 10 inexpensive cities with respect to the cost of living, Verghese added.

The report also points out that Hyderabad is ranked 7 in the Alternative Tech Locations ranking. The city ranks highly on growth potential like all Indian cities, but scores low on other socio-economic factors. Hyderabad does not match Bengaluru as a source of talent. However, tax rates and cost of living are low and the city scores better than many other Indian cities on human factors.