Tencent Holdings has chosen a co-working space for its first office in Singapore, joining other Chinese technology giants in using the city state as a launching pad into the rest of Asia.
The WeChat owner - which said last month it would open an office in Singapore - will have almost 200 seats at JustCo's co-working space in OCBC Centre East at Raffles Place. This was according to people familiar with the plans who asked not to be named because the matter is private. The space amounts to 10,000 sq ft.
The lease runs for one year, giving China's largest social media and video gaming company flexibility to seek a larger space as it adds staff, the sources said.
Representatives for Tencent and JustCo did not immediately respond to requests for comment.
The deal paves the way for Tencent to make Singapore its beachhead for a push into South-east Asia.
ByteDance, the owner of popular video app TikTok, is also expanding its office space in the city state, while Alibaba Group Holding earlier this year bought a 50 per cent stake in a Singapore office tower.
The demand from Chinese tech firms could also boost Singapore's office market, which has been battered by the coronavirus pandemic, with some companies vacating leases and landlords forced to cut rents.
Tech firms have taken up 350,000 sq ft of office space in new leases and expansions this year, and that could rise to 400,000 sq ft to 500,000 sq ft next year, Cushman & Wakefield estimates.
Singapore is seen as an attractive base as it provides a gateway to South-east Asia's 650 million smartphone-savvy population. It also offers relative political stability and developed financial and legal systems.
China's tech giants are increasingly turning their attention to the region amid growing hostility from the United States and India.
The Trump administration wants to remove WeChat from mobile app stores in the US and impose other restrictions, though a court has blocked the move. India has barred the company's hit games, PUBG Mobile and Arena of Valor.
Choosing a co-working space gives companies "the advantage to be flexible in markets where headcount growth is unclear and there is a possibility that business can grow so quickly that they run out of space," said Ms Christine Li, Cushman & Wakefield's head of research and business development services for South-east Asia. It is a common strategy for tech firms entering a new market - Alibaba and Facebook used it when they started in Singapore.