Co-working: What does the future hold for India

April 8, 2020 / By  

Co-working  got underway as a workspace solution for freelancers, entrepreneurs and start-ups to work collaboratively with like-minded people. Today, co-working operators provide workspace solutions to users ranging from freelancers to corporates that require a few thousand seats. The supply of co-working spaces across the top seven cities[1] in India reached an all-time high in 2019 with the year witnessing a take-up of more than 9 million square feet.

The current health crisis has disrupted the co-working market, globally. While it is likely to fast track the adoption of remote working, a complete shift in mindset is required before the practise becomes prevalent in India. In fact, more companies might consider flex spaces as means to reduce capital costs. Hence the perceived risk to future demand for co-working in India is minimal. Demand from all quarters is expected to rebound once the disruption fades away in the next few months. With prominent players expanding their capacity to cater to this demand, the co-working stock across the top seven cities in India is expected to double in three years, exceeding 50 million square feet in 2022.

Large enterprises to drive demand

Large enterprises have increasingly been looking at shared workspaces as a viable option. This has led to co-working operators offering managed office spaces in addition to flexible workspace options. Moreover, several operators provide specialised end-to-end solutions – from sourcing the property to designing and ultimately operating the office. Today, large enterprises account for more than 50% of the co-working demand in most markets within India.

Technology to be a game-changer

There are more than 300 co-working operators at present. These players are adopting different business strategies to maintain a strong foothold in the market. While some are targeting enterprise clients for a sustainable portfolio, a few are catering to niche segments such as Micro, Small and Medium Enterprises. Certain operators rest their unique selling proposition on competitively pricing their offerings. Furthermore, there is an increasing use of technology. Most prominent operators offer in house apps to book office and meeting spaces in centres across the country, book cabs and much more. Operators have also started leveraging Internet of Things and Artificial Intelligence to make workplaces smarter, dynamic and more interactive. And, as operators attempt to increase market share, the adaptation of technology will become a game-changer.

Mergers and Acquisitions to garner pace in the next few years

Most co-working players in the Indian market are focusing on attaining scale and capturing market share. This can be done through either organic growth or mergers. Consolidation through mergers, and acquisitions by institutional investors, is expected to garner pace in the next few years. In the long term, a few prominent operators are expected to capture a lion’s share of the market.

Co-working to expand beyond office buildings

Co-working operators are expanding their horizons, and venturing into shopping malls, hotels and metro stations,  which provide occupiers with a greater choice of locations. Landlords of non-office buildings are also considering providing co-working spaces to diversify their revenue stream and garner additional footfalls.

Diversification into additional services and amenities is where the sector has changed from the earlier generation of offices. The focus on services and user-experience ensures that occupiers are getting added-values that makes them want to stay. This serves to further the shift of the real estate sector from a product to a service.

[1] Top seven cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata                                                                                      

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