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Flexi Workspace Cos Now Prefer to Acquire, Not Lease, Properties

02 Apr 2024

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@timesofIndia

Flexible workspace providers like Table Space, Bhive, Indiqube, and EFC are shifting strategies to acquire properties across India instead of leasing them to meet growing demand for flexibility in the office since the pandemic

The Indian market size for flexible offices is expected to touch 100-140 million sq ft by 2030, up from 55 million sq ft currently, according to a recent report by MyHQ, a flexible workspace provider.

“We have already acquired a few assets and plan to have 4 million sq ft in the portfolio. Acquiring the assets gives us better control over the property, and it also results in a better rental yield,” said Amit Banerji, CEO of managed workspace operator Table Space Technologies.

Table Space recently raised over $325 million from global private equity fund Hill House Capital to expand operations across key office property markets in the country. The company plans to buy assets and subsequently turn them into managed spaces.

Growing interest of foreign funds in Indian coworking firms has also played a key role in brands looking to go for an asset-heavy model.

Flexible workspace operators have raised Rs 4,600 crore since the pandemic, compared to Rs 1,400 crore in five years prior to Covid-19.

“We own about 100,000 sq ft and plan to add more to it through an alternative investment fund. That fund will acquire assets for us and we will operate it as a flexible workspace provider. Owning the assets helps in increasing the rental yield of the property,” said Umesh Sahay, founder and CEO, EFC (I).

The company plans to increase operational seat numbers from 32,000 seats to 92,000 seats by March 2026.

Operators like Table Space, Bhive, Red Brick, and WeWork have sharply expanded their real estate portfolios, largely driven by growing client needs, increasing it from 50,000 sq ft to over 150,000 sq ft. But experts say that the strategy of buying assets might work for a few players and that too in select cities due to the high level of investments needed.

“In India, however, purchasing real estate within this segment of the business remains limited to specific markets. Major operators typically refrain from the buying route due to its high costs and the substantial investment required,” said Pratyush Pandey, CEO, Upflex India.

Google, Samsung, Rolls Royce Energy, Kotak Mahindra Bank, and Larsen & Toubro are among top corporations opting for flexible workspaces. Rising demand has spurred commercial real estate absorption by coworking operators in the top seven cities.

Key coworking brands have increasingly started using technology solutions to create experiential workplaces via asset and inventory management, ondemand meeting room booking facilities, parking automation, smart visitors, and access controls.

Author : Falzan Haldar