Property TypesCo-working Space
Synonyms: Coworking space، Shared office، Flexible workspace، Flex office
Last updated: 2026-09-25
Short Definition
A co-working space is a flexible workplace run by a single operator in which different individuals and companies use shared desks, offices and facilities in return for an hourly, daily or monthly membership, instead of leasing a separate office on a long lease.
Overview
A co-working space is a flexible workplace run by a single operator in which different individuals and companies use shared desks, offices and facilities in return for an hourly, daily or monthly membership, instead of leasing a separate office on a long lease. Packages usually include hot desks with no fixed seat, dedicated desks, closed private offices and meeting rooms, with services such as internet, reception and hospitality. Users include freelancers, start-ups and satellite teams of larger companies. It is not always cheaper than a conventional office - the cost per desk or per square metre can be higher - and its main advantage is flexibility, low commitment and low upfront cost.
Saudi Arabia has no law specific to co-working spaces. The closest municipal framework is the Office Requirements of the Ministry of Municipalities and Housing (1446H/2024), which regulate "business incubators": spaces with closed and shared offices, an open shared work area, meeting rooms, a reception and separate washrooms, together with a programme supporting entrepreneurs. An incubator requires the approval of the Small and Medium Enterprises General Authority (Monsha'at), must be at least 250 m2 as part of an existing building or 450 m2 in a standalone building, and each closed office inside it must be at least 7 m2 and needs its own licence. A co-working operator's licensing route depends on how its activity is classified; it generally needs a municipal licence, Civil Defense approval and a valid commercial registration, and must be on a site designated for commercial or mixed use.
Contractually, many operators use membership or service agreements rather than a classic lease, and substance decides: granting exclusive use of a defined space for a term and a rent resembles a commercial lease to which Ejar rules may apply, whereas access to shared desks is more likely a service contract. Membership fees carry 15% VAT when the operator is VAT-registered. Before signing, check the termination, renewal and price-increase terms and whether the business can be licensed at the space's address.
⚖️ Legal Basis
There is no co-working-specific law; the closest framework is the Office Requirements of the Ministry of Municipalities and Housing (1446H/2024), which regulate business incubators (250 m2 within an existing building or 450 m2 in a standalone building; closed offices of at least 7 m2 with their own licence) and require the approval of the Small and Medium Enterprises General Authority (Monsha'at), together with a municipal licence under the Municipal Licensing Procedures Law, Civil Defense approval and a valid commercial registration. Service fees carry 15% VAT under the VAT Law, Royal Decree M/113 dated 2/11/1438H, when the operator is registered (mandatory threshold SAR 375,000).
💡 Practical Example
A start-up with three founders joins a co-working space in Riyadh on a "dedicated desk" package at SAR 1,500 per desk per month, i.e. SAR 4,500 a month; the operator is VAT-registered, so 15% = SAR 675 is added, for a total of SAR 5,175 a month. Six months later the team grows to eight people and moves to a 20 m2 closed private office at SAR 9,000 a month + 15% = SAR 10,350. Before signing, the founders review the form of the contract (membership agreement or lease) and the notice period for termination, and confirm that their activity can be licensed at the space's address, since a closed office inside a business incubator needs its own licence under the Office Requirements.
⚠️ Common Mistakes
- ✗Assuming co-working is always cheaper - the cost per desk or square metre can exceed a conventional office; the real advantages are flexibility, low commitment and low upfront cost.
- ✗Signing a membership agreement without reading the termination, renewal and price-increase terms, on the assumption that Ejar commercial-lease rules apply automatically.
- ✗Leaving the 15% VAT out when comparing packages, although it is added when the operator is registered.
- ✗Operating a licensed activity from a closed office inside a business incubator without a separate licence for that office.
- ✗Running a co-working space on a site not designated for commercial or mixed use, or presenting it as a "business incubator" without Monsha'at approval.
🌍 International Differences
Co-working spaces spread worldwide during the 2010s and are classed in many markets as "flexible space", usually contracted through membership or service agreements rather than conventional leases. In the UAE some free zones pair a company licence with flexi-desk or shared-office packages, and in Turkey and Egypt such spaces are widespread in the major cities. The Saudi specific is that the nearest municipal framework is the regulation of business incubators within the Office Requirements, with Monsha'at approval and a separate licence for each closed office.
FAQs
Is there a specific law for co-working spaces in Saudi Arabia?▾
There is no standalone law; the closest municipal framework is the Office Requirements of the Ministry of Municipalities and Housing, which regulate business incubators and the closed and shared offices inside them. The operator's licensing route depends on how its activity is classified.
Is a co-working contract a lease?▾
It depends on its substance: many operators use membership or service agreements granting the right to use shared facilities, whereas granting exclusive use of a defined space for a term and a rent is closer to a commercial lease. Read the contract to understand your rights on termination and renewal.
Are co-working memberships subject to VAT?▾
Yes, they carry 15% VAT when the operator is registered, and registration is mandatory once taxable supplies exceed SAR 375,000. The residential-rent exemption does not apply to them.
What do the Office Requirements say about business incubators?▾
An incubator must be at least 250 m2 as part of an existing building or 450 m2 in a standalone building, and include a reception, an open shared work area, meeting rooms and separate washrooms. It also requires the approval of the Small and Medium Enterprises General Authority (Monsha'at).
Does a closed office inside a business incubator need its own licence?▾
Yes. The Office Requirements define a closed office as an independent entity allocated to a beneficiary inside a business incubator that requires its own licence, with a minimum area of 7 m2. Confirm the licence before operating from the office.
