Chennai: The fall of WeWork will not have any major impact on the nascent co-working space in India. But investment proposals might get thoroughly vetted, finds industry.
The massive demand for co-working spaces in the country by budding entrepreneurs, tech start-ups and even the big multi-nationals is beyond dispute. Given this growth potential in India, the overall impact of WeWork's troubles on Indian co-working firms may not be significant, said Shobhit Agarwal, MD and CEO, Anarock Capital.
However, WeWork’s India valuation and future expansion plans may not be deeply impacted by the recently jinxed listing plans. Its India operations are a minuscule, single-digit fragment of its global operations, he found.
"Operationally we don't think there is going to be much of an effect in India for the already running location or even the upcoming once. The issue is that of valuation and that might impact on future expansions/growth strategy. India is a large commercial property market and demand for commercial office space continues to be heading northward. The emergence of co-working space has brought services element into the commercial space and services and will remain the key factor of survival for the co-working segment,” said Shantanu Mazumder, Senior Branch Director Bangalore, Knight Frank India. “Yes, but from the investment point of view things will be re-looked and only wise business proposition shall move ahead," he added.
As on 2018-end, the total supply of flexible workspaces was anywhere between 7 and 7.5 mn sq ft area and is expected to cross 10 mn sq ft by 2019-end. While demand for co-working spaces has seen steep annual growth of 30-40 per cent in previous years, trends suggest it may grow by a more moderate 15-20 per cent over the next few years. It had witnessed a 23 per cent growth in Q2 2019 over the preceding quarter across the top 7 cities.
Consolidations are happening co-working as well. It started in 2018 with major acquisitions like One Co. Work acquiring IShare-Space and AltF CoWorking acquiring Noida-based Daftar India etc. This trend will continue.