US shared-workspace provider WeWork plans to launch in South Africa this year, it said on Thursday, in a move that would mark the first African expansion for the US$47 billion New York-based company.
The firm, backed by Japan’s SoftBank Group, will team up with Redefine Properties, one of South Africa’s biggest real estate companies, in opening its first location in the upmarket Johannesburg suburb of Rosebank in the third quarter.
The company’s managing director Eugen Miropolski said: “Expanding here is an obvious choice for us: It’s our first location in Africa and, with its global outlook, South Africa is the gateway to the rest of the continent, so we’re excited to welcome new members and grow our community here.”
WeWork leases office spaces and sublets them out to individuals and start-ups – a model that creates a mismatch between its erratic income stream from clients – who can rent for as little as a month – and the fixed rent it has promised to landlords.
However, in South Africa, WeWork will sign a revenue-sharing lease with Redefine, which broadly means the rent would depend on the revenue it generates from subletting the space, a source familiar with the matter said.
The model is being rolled out to landlords, and is expected to become increasingly common for the company, the source said.
Mr Miropolski also said WeWork had no immediate plans to expand elsewhere on the continent.
“We are looking to expand our footprint across Africa, and we’re very excited about the potential here, but right now, we’re focused on launching in Johannesburg and building our local community,” he said.
In its first release of financial results in August, the privately held firm reported a net loss of US$723 million for the first half of 2018 versus US$154 million a year earlier.