Coworking to move to ownership model this year

Despite the crash of co-working giant, We Work in the US late last year after an abortive IPO listing, co-working spaces continue to be popular in India, according to a report by real estate consultant Anarock.

The report said that the sector is likely to move towards the ownership model this year. It stated that the lease-based structure, that is the model presently, is not flexible and cost-effective. This year is likely to see the rise of an ownership model in partnership with landowners, developers or the space providers.

In the coworking space, the top seven operators - Cowrks, WeWork India, Awfis, Regus, Smartworks, 91springboard and OYO Workspaces - have more than 350 centres across cities in the country.

“This number is likely to double or even treble in the next two years, given the rate at which these leading players actively leased spaces across major cities in 2019,” said Anuj Puri, Chairman, Anarock Property Consultants.

The report also pointed out that in the past couple of years, the sector has seen most of its deals driven by large PE players and venture capitalists. Last year saw PE firm ChrysCapital investing $30 million in Awfis. Meanwhile, real estate investment fund SmartOwner also put in $4.28 mn in Workspace. BlackRock & CLSA Capital Partner have invested $53 million in GoWork.

Millennials are going to be the driving force behind the popularity of coworking spaces, according to the report. “Millennials are set to form 50% of the global workforce soon. This influential segment has been at the core of the coworking story in India and will continue to drive demand for such spaces in the country,” Puri said.

Anarock says that contrary to general belief, the sector is no longer driven solely by start-ups, millennials and SMEs – and caters to mainstream corporates and large enterprises as well.

In 2020, more large companies will opt for flexible coworking spaces for their short-term expansion plans.