Hyderabad: India is witnessing a proliferation of startups and SMEs and this is providing scope for dynamic co-working business centres to cater to the office space. The workplace is now being looked at as an environment that needs to be managed and optimised. The country is at the cusp of a co-working revolution. There are close to 280 co-working players running an estimated 400 shared workspaces across India.
According to JLL, Hyderabad, Delhi-National Capital Region, Mumbai, Chennai, Bengaluru and Pune are the top six cities in terms of the demand for shared workspaces in India. A demand for at least five million seats in these six cities alone is expected while 8.5 million seats of the projected demand will come from tier 2 and tier 3 cities by 2020, adding 25-26 million sq ft. About half a million each of the total addressable market demand for co-working spaces would be found in the three main southern cities of Bangalore, Chennai and Hyderabad, along with Pune.
Serviced workspace provider Smartworks founder Neetish Sarda told Telangana Today, “We are seeing both Indian companies and foreign companies setting up their base in the country opting for co-working space as the model allows companies focus on core competencies. The companies on an average save 15-20 per cent when they use our space, compared to conventional offices, because of the scale we offer.”
He added, “We see Hyderabad and Bengaluru to be key markets in south. We could be adding about 6 lakh sq ft space within next two years in Hyderabad alone. There is also potential in tier-2 cities, though 95 per cent of the total space created is in the top nine cities of the country. India is fast picking up in this space with 280 players in this market. Two years back, there were less than 10 players in this space. In the next five years, it is estimated that India will consume 160 million sq ft of co-working space.”
Smartworks is looking to primarily serve startups which are in the Series B and Series C stage, as the infrastructure that it provides is for teams that are of the size of 130-150. The company’s deal timeline on an average has been three years. Not only IT companies, other sector companies are consuming the serviced workspace. The company going forward is looking at creating standalone building where it can control the office experience.
Private equity investors, both domestic and foreign, are keen to invest in the co-working space operators/providers. Indian market which is $5-6 billion now is expected to grow 4-5 times by 2021.
Samantak Das, chief economist and national director – Research, Knight Frank India, said “Due to the changing perceptions of the office, the workplace is being viewed as an instrument that could drive a dynamic and vibrant culture of corporate productivity impacting the financial, cultural and environmental ethos of the organisation. This far reaching agenda warrants an element of specialisation. The co-working operator is filling this niche and is fast being regarded as a specialist in workplace management who can cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier.”
He added, “Indian corporates today constitute approximately 50 per cent of the co-working operator’s overall client roster bears testament to its increasingly widespread acceptance among mainstream occupiers. While co-working companies took up a modest 0.17 mn sq mt (1.8 mn sq ft) in 2017, the first quarter of 2018 itself has exceeded the annual tally of 2017 at (0.19 mn sq mt) 2 mn sq ft. The expansion plans of major players and the increasing appetite for this format from occupiers, property owners and co-working operators should see annual transaction numbers triple from current levels over the next 3 years.”
In Q1 2018, the highest co-working transaction activity was witnessed in Bengaluru, NCR and Hyderabad markets, which contributed 43 per cent, 16 per cent and 15 per cent respectively, according to Knight Frank.