Co-working on the rise as start-ups in India begin to flourish
Co-working is growing at a rapid pace in India, driven by the country’s expanding economy, booming start-up sector and its young population, according to a new report by property consultancy Anarock.
There are more than 200 companies in the segment operating 420 co-working spaces in the third-biggest Asian economy and this number is likely to triple over the next two years, the report forecasts.
“With businesses big and small continuing to grow and broaden their horizons, expensive real estate coupled with new-age professionals’ desire to work in an aesthetically appealing environment have spurred demand for collaborative work spaces in India,” said Anuj Puri, the chairman of Anarock Property Consultants in Mumbai.
Modern, shared office spaces, have sprung up across India’s major cities, often including facilities such as pool tables and trendy cafes, as well as hosting social and cultural events.
India is the youngest startup country in the world with more than 70 per cent of founders under the age of 35, the report noted.
“The co-working segment showed enormous growth in 2018, with a lot of expansions, acquisition, and investment,” said Sarthak Chhabra, the director and co-founder of AltF CoWorking, which is based Gurgaon, a satellite city of Delhi that describes itself as India’s first private co-working space provider.
“Not only start-ups but SMEs and corporations are also moving to the new culture of working. The demand for private co-working spaces has also increased ... [by] 25 per cent in 2018,” said Mr Chhabra. “With this massive growth registered in the segment, 2019 is expected to entice more opportunities, investments, and entrance of new players into the market.”
Co-working reduces expenses for businesses by 15 to 25 per cent by cutting down rental costs, investments and property maintenance, according to Anarock. It is becoming more popular as office rents are on the rise in India.
Mumbai, Bangalore and the Delhi National Capital Region are the hotspots for co-working spaces.
India is the world’s fastest growing major economy with GDP growth of 7.1 per cent in the quarter to the end of September.
The population of 1.3 billion also has a young demographic, with half of its citizens under the age of 25.
India is expected to have more than 10,500 start-ups by the end of 2020, third only to the US and UK, according to industry group Nasscom.
Co-working deals in India last year were driven by private equity companies and venture capitalists, whereas in previous years the segment was dominated by angel investors, according to Anarock. Last year, the sector also started some consolidation and acquisition deals.
“In 2019, we will witness a steady phase of consolidations, buyouts, and mergers in this industry,” said Sudeep Singh, the chief evangelist and chief executive of GoWork, a co-working space in Gurgaon. “Players will also merge with niche service providers to enhance their brand offerings.”
According to Mr Chhabra, the co-working sector has enormous scope for further growth over the coming years in India, as it will expand to smaller cities.