Why Co-Working Is Hot Property Among Investors

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THE DEMAND FOR WHAT’S BEING TERMED AS "COOL" OFFICES HAD BEEN GROWING IN LAST FEW YEARS. HOWEVER, POST PANDEMIC THE FACTORS FUELLING INVESTMENTS IN THE CO-WORKING REAL ESTATE GO BEYOND THAT. The co-working workplaces have evolved over the years and are no longer the preferred office setup for start-ups or millennials only. In fact, the mainstream corporates are the biggest driver, followed by SMEs and start-ups. As Ramita Arora, Managing Director, Bengaluru - Cushman & Wakefield explained, “Co-working industry has become flexi industry offering varied business services. A lot of operators stepped in and evolved the co-working to managing or offering enterprise solution to their clients.” Amit Ramani, Founder & CEO, Awfis Space Solutions Pvt Ltd agreed,“We are a diversified co-working player, our business is located at different locations across 11 cities. We provide integrated solutions for work from home or at office. We always believe it will be supply side story not only demand side.” In the opinion of Gagan Randev, National Director, Capital Markets & Investment Services, Colliers International, “The co-working sector is likely to remain strong after the initial recovery phase. In fact, there are likely to be dedicated co-working deals where companies could enlist a co-working service provider to take on a space solely for their use. This would give them the experience of flexibility in a dedicated space.” Investments in the coworking sector are enabling shared space providers to scale up not only in terms of geographical expansion, but also technological innovation. Monika Misra Founder, General Manager, iKeva was of the view that the co-working operators will have to be more agile. “With the amount of transactions happening, another 3 million square foot cannot be absorbed by just retail customers, you have to have enterprise clients. The businesses are now looking at managed office spaces and how flexible the provider can be across cities." Paras Arora, Co-Founder & CEO, Qdesq shared, " Shared workspaces cut down the hassle by providing capex services of fully setup and managed offices as well as opex advantages like unlimited supply of tea/coffee, electricity, wifi, and printing options available in the workspace.” Yash Shah, Founder & CEO, The Address added, "There have been strategic changes in the entire industry. Coming years will see an uptick in worker demand for coworking spaces as they are more than just a desk and Wi-Fi , for many they're a social outlet, Thus, many investors are looking at now as the optimal time to investing in co-working spaces. SHORT AND LONG TERM IMPACTS The pandemic has definitely impacted the real estate sector in the short term and long term. As per Gagan Randev, the leasing in the commercial sector will bounce back without too much of an impact, but the sector would witness delay in sign-ups of large, new deals and renegotiation of rentals. According to Amit Ramani, when the market opportunity becomes large than clearly capital will chase that growth. “With the liquidity across the globe I think capital will be available for formidable players to raise capital. Institutional investors will chase large players as it's all about execution and scaling up." CA Sambhav Mehrotra agreed that there are no barriers for new players and in past few years the segment has grown from 3% of the overall commercial real estate to almost 20%. Paras Arora said that we are going to see consolidation in the sector in coming years and more growth opportunities as well with most organizations focusing on reducing Capex. Monika Misra said, "The co-working sector is about service experience, being asset light and exploring newer cities.” Yash Shah concurred, “We are actually a hospitality and a service industry than a real estate industry." Ramita Arora added, “A lot of companies keep certain percent of their portfolio into flex spaces. This is an asset class that has the potential to grown in tier-2 cities, if the infrastructure, Grade A buildings with proper compliances start getting available.”