Coworking Office Spaces in India

Being one of the world’s fastest-growing economies, India continues to be a promising marketplace for setting up businesses and establishing corporate premises. Urbanization is at an all-time high, especially in Tier 1 and Tier 2 cities like Mumbai, Bangalore, Delhi, Gurugram, Chennai, and Pune. As these cities witness an upsurge in startups and emerging businesses, the demand for coworking office spaces continues to grow coherently.

According to a report by CBRE (Coldwell Banker Richard Ellis), a leading global real estate consultancy, India’s coworking spaces witnessed a staggering 277% Y-o-Y upsurge for 2018-2019. In the first quarter of 2019, India’s leading hospitality chains have acquired Gurugram-based coworking startups for as much as a whopping ₹ 200 crores, which has ushered the arrival of hotel-based coworking spaces. In the years to come, India’s coworking marketplace will continue to be a honeypot for investors. Here’s why:

High Profitability

In a coworking office space that manages less than 50 members, the profitability rate is approximately 40%. The profitability of a coworking business is directly proportional to the growth in membership. As the number of members joining a coworking space increases, the profitability witnesses a significant surge. In order to retain high membership, coworking spaces can readily offer extra amenities, improved security, flexible leasing, and other advantages.

Suitable for Angel Investments

The coworking marketplace in India is ideal for all sorts of investors. Angel investors, in particular, can gain a high ROI from coworking office spaces. There are limited dependencies for investing in shared workplaces, compared to other real estate options. Angel investors can take advantage of the growing market opportunity that coworking represents. The business plan of every coworking company is pretty clear, providing enough evidence on generating traction in the early stages of investment.

In the overall coworking landscape, the founders and the key stakeholders are extensively integrated with their passion for growing their business. With an appropriate and reasonable valuation, these coworking enterprises can boost their image in the eyes of angel investors. Being a mix of intellectual property and interesting technology, the coworking business in India is certainly a goldmine for angel investors.

Regulatory Benefits

The legal aspects of running a coworking office space are transparent and easy to follow. This, in turn, makes the legalities of investing them easier. In India, a coworking office space can be easily established in the urban areas, especially in proximity to the existing technology parks and corporate sectors. At the same time, it is practically possible to convert residential properties such as a freehold bungalow or a private apartment into commercial properties for setting up coworking workspaces. The costs entailed are high but can be considered as one-time investments.

Fewer Risks and Shared Costs

There are a few inherent risks associated with investing in coworking spaces. Some coworking businesses fail to realize the valuation put forth during the investment phase. Due to high competition, there are multiple options on coworking spaces, which becomes a barrier for market entrants. However, these risks are mitigated by offering flexible leasing and additional amenities.

The cost of risk mitigation is also not a burden. Majority of the costs spent on staffing, maintenance, services, and marketing are shared by coworking enterprises and stakeholders. At the same time, large companies tend to partner with coworking spaces on long-term leasing contracts. In such cases, the coworking service providers get paid with huge upfront expenditures made by these companies. As a result, the angel investors backing these coworking ventures are also able to reap profits early on.

To sum it up, coworking office spaces are great funding avenues for angel investors. In due course of the next decade, the coworking landscape in India is expected to witness several positive activities from the investment purview.

IA Team