Technology

Experts’ Forecast on the Future Growth of Coworking Spaces in India

The startup eco-sphere has been continuously growing in all major cities in India and despite the occasional hiatus, the various global giants in the office space industry have notably shown considerable interest in the co-working segment. A host of startups are now hoping to lower the operating costs of owning or renting exclusive office spaces. This reduction in operating expenses allows startups to invest more funds in core business, such as increasing production or retaining talented employees by offering them desirable higher salary packages. Coworking spaces have become very popular due to the pay-per-use model with reasonable and defined rates for the set of services offered.

Also, these shared office spaces have certain unique amenities like a food court, babysitting services, play areas, spa, gym, sleeping pods, etc. All of these added conveniences have made these offices even more popular. All of these amenities very positively raise staff morale, which eventually improves productivity. The presence of childcare provided by trained staff also brings great relief to working couples, who can focus well on their work without compromising their parenting responsibilities. Office spaces also have a great atmosphere with great aesthetics and interior design. These factors create an orderly and relaxed atmosphere in these office spaces that alleviate work stress that professionals often experience.

Trends in coworking spaces expected in 2018

These shared office spaces offer a great deal of cost savings, which is also combined with the ability to network with other entrepreneurs operating from the same workspace to achieve certain common goals. Therefore, these shared offices are certainly here to stay and evolve in 2018. Regardless of the high potential that these shared office spaces have, there are also certain factors that can be obstacles in their rapid expansion. These factors include the following:

• Stakeholder orthodox attitude: There are few owners who have failed to fully understand the concept of coworking and are often wary of leasing real estate assets to coworking operators. Due to lack of proper awareness, they feel that it is safer to rent their properties to traditional companies. Furthermore, this has witnessed India having certain flaws in the legal system that the acts prove to be a deterrent for co-working space operators to opt for court battles against landowners.

• Exclusivity agreements: according to the exclusivity agreement, only one coworking operator can be accommodated in a specific building. This leads to a non-optimal use of space. Therefore, a limitation is exerted on the growth potential of the coworking space industry.

Despite the above hurdles prevailing today, industry experts predict that the future of coworking will be very bright after witnessing the increase in demand for coworking offices.

Expectations for future growth of coworking offices

Joint Venture Operating Companies are the most popular startups in India, receiving millions of investments from major investors. The work culture is gradually evolving with the increasing adoption of coworking spaces. There is an average occupancy of 85% of the coworking spaces available in India today. This has shown that a minimum of 20-25% of operating costs can be saved by adopting co-working spaces. Sometimes it is even higher depending on the nature of your business.

Experts are of the opinion that co-working is going to be a mainstream trend in India and this is for sure not just an ephemeral style that will likely fade like mullets and flared jeans. Based on observations, various experts predict that India offers fertile ground for the immense growth of co-working spaces. The reasons for the high demands on coworking spaces are the burgeoning ecosystem of startups and the huge list of flexibility attached to coworking spaces.

Big investments are already in

India has seen the demand for co-working spaces not only from startups and freelancers, but also from major business conglomerates and corporations. The expected funding for coworking space provider companies is expected to be $ 400 million in 2018. It is expected that 70% of the business opportunity will come from large corporations.

Crucial statistics related to the Indian coworking phenomenon

Delhi, Mumbai and Bangalore are the cities that are already experiencing rapid growth when it comes to the demand for coworking spaces. The expectation is that there will be around 400 shared offices in India by the end of 2020.

In 2018, industry experts predict that there will be an increase in exclusivity agreements. This would mean that there would only be one coworking space in a single building. This is proving to temporarily dampen the market for coworking operators and also lead to suboptimal use of amenities and space. There are big players like Cox & Kings, Sequoia and Paytm that have already invested in the coworking space market and therefore may face a temporary setback in 2018.

Industry experts predict that coworking spaces will soon end lease-based models that have certain restrictions attached to them. They are likely to implement a unique ownership model that offers even more flexibility at an even lower price. The demand for co-working spaces is skyrocketing today and this is a sign that the future growth of co-working spaces is obviously at stake.

To share your views and experiences regarding co-working spaces, feel free to write to us in the comment box below.

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