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CoWorking In India: Potential Bubble In The Making

coworking
CoWorking In India: Potential Bubble In The Making

STARTUP

CoWorking In India: Potential Bubble In The Making

The concept of coworking space is not new for us anymore. We all are aware about individuals who are engaged in shared workspaces. For the unversed, coworking spaces refer to those platforms where different companies, startups, freelancers and many others work at a common space. The biggest advantage of a coworking space is that the individuals do not have to bear the expense of rents and other office equipments. Other than that, they also become free from any long term rental agreements.

Coworking spaces are also beneficial for the commercial property owners rent out more spaces to the coworking members. Other than that, these spaces also have facilities like plug  and  play options which are available at different competitive rates. There are some kinds of packages available in these spaces which include internet, conference halls, meeting rooms, technical assistance, etc. This is the reason why the coworking spaces are considered to be convenient as well as cost effective in nature. The collaborative nature of these spaces also helps to build business opportunities and new communities.

The trend of coworking spaces which began in the West during the late 90s, has been spreading like wildfire all over the world. India has already been gripped by this particular trend. The Indian commercial property market has been completely revolutionized after the introduction of coworking spaces. There are more than 400 coworking spaces all over the country and the numbers have been increasing day by day. Moreover, the rise of the culture of entrepreneurship in the country has further supported its growth. This is because most of the newly established startups always look for some frugal ways to run their business.

Nowadays, a few large companies have also diverted their attention towards coworking spaces because of its cost efficiency. May be this is the reason why most of the coworking spaces are being dominated by large companies nowadays.

Now, let us understand some implications of coworking spaces on the Indian coworking industry:

  • Supply more than demand: As a result of the growing trend of coworking , many players having varied operational scales have saturated the Indian market. This is the reason why Private Equity players such as Awfis and WeWork have started offering prices while acting as value differentiators. It can be said that there will be an increased consolidation among the co- working operators. However, this consolidation may lead to the availability of very less options for supply.
  • Coverage of Tier – 2 and Tier – 3 cities: The metro cities such as Mumbai and Bengaluru have a bigger share of coworking spaces in the entire country. However, this may not remain the same after a few years. A large amount of the overall market share will also be springing up in the Tier 2 and Tier 3 cities of the country.
  • Change in revenue – share models: Due to the rising number of coworking spaces, the landlords will be changing the old format of the revenue share models. Till now, most of them had opted for a fixed term rent which is based on a simple model of monetization. But over the next few years, this model may be replaced as some of the landlords will opt for a model in which they will be earning a percentage of the business revenue which will be generated by the players of the coworking spaces.

Coworking spaces have their own pros and cons. Now, only time will tell whether the coworking spaces will prove to be beneficial for the Indian commercial market or end up creating a ruckus.

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