Coworking Spaces’ Influence on the Indian Real Estate Market: A Comprehensive Analysis

coworking spaces in real estate

Before we can comprehend the various aspects of coworking office spaces, let’s first get a firm idea of coworking. In simple words, coworking is an arrangement where different people from different backgrounds work under the same roof and share an office space. This provides connections,  social support, flexibility, exposure, and legitimacy. According to a study, the market for co-working spaces is expected to reach one million seats in the next three years due to the increase in traction of the coworking sector. 

After the pandemic, the co-working industry in India experienced a sharp increase in business. The co-working market in India provides a viable response to the urgent occupier wants and requirements at a time when businesses are attempting to find a balance between productivity and cost containment. More buyers today in real estate are interested in investing in the sector leading to coworking space promotion due to the terrific growth prospects in the sector.

Current State of the Indian Real Estate Market

The Indian real estate market is expanding rapidly, with a CAGR of 21.2% expected over the next five years. 

Commercial real estate industry in India is highly competitive and well-organised. Demand for commercial real estate space has undoubtedly increased as a result of several government reforms, a growing economy, digitalization, and growth in the IT/ITeS industry. But one of the primary causes is also the expansion of coworking spaces, (as shared workspaces are slowly replacing conventional office spaces); as a result of the coworking industry’s explosive growth in demand, many real estate investors are investing in coworking spaces and adding them to their portfolios of properties.

Commercial real estate in India has grown significantly over the past ten years, from expansive business parks and office spaces to gigantic malls. Over the next three to five years, the coworking sector is predicted to increase three times, creating enormous prospects for this industry in India. Co-working has now solidified itself as a mainstream industry, contributing significantly to the increase in lease activity for coworking spaces in real estate.

Impact of Coworking Spaces on the Indian Real Estate Market

1. Increased Demand for Flexible Workspaces

The COVID-19 pandemic has accelerated the trend towards remote work and increased demand for flexible workspaces. Employees seek more flexibility and autonomy in where and how they work, while companies look for cost-effective solutions that can adapt to changing needs. Flexible workspaces offer a solution that meets both needs. 

2. Effects on Traditional Real Estate Players

The rise of coworking spaces has disrupted traditional real estate players by creating competition and changing the way people work. Landlords and developers must adapt to the growing demand for flexible workspaces or risk losing tenants. Coworking spaces have also created new opportunities for real estate players to diversify their portfolios and generate revenue. 

3. Changes in Office Space Design and Amenities

Coworking spaces are changing the design and amenities of office spaces by focusing on creating a more collaborative and flexible environment. Amenities like lounges, meeting rooms, and shared kitchens are now standard, while open floor plans and flexible seating options allow for improved interaction, enhanced work culture and increased productivity. Coworking space aggregators like Stylework also provide space customization solutions with top-notch facilities. The focus is on creating a more enjoyable and functional workspace. 

4. Emerging coworking industry trends 

Some emerging trends in coworking spaces include the use of smart technology to personalize and automate the user experience, the incorporation of wellness and sustainability into workspace design, the expansion of coworking spaces into suburban and rural areas, and the growth of specialized coworking spaces catering to specific industries or interests. Additionally, hybrid models that combine coworking and traditional office spaces are becoming more popular. 

Challenges Faced by Coworking Spaces in India

Let’s understand how the following factors impact the coworking industry- 

1. Competition from Traditional Real Estate

Coworking spaces in India face competition from traditional real estate players who can offer lower prices and longer leases. Additionally, navigating India’s complex regulatory landscape can be challenging for coworking space operators. 

2. Regulatory and Legal Challenges

Coworking spaces face regulatory and legal challenges such as compliance with zoning and building codes, tenant and subleasing laws, and liability issues. Additionally, data privacy, intellectual property, and contractual disputes can pose challenges for coworking space operators. To mitigate these risks, coworking spaces must have clear policies and procedures in place and seek legal advice when necessary. 

3. Economic and Market Factors

Economic and market factors, such as rising real estate costs, uncertain regulatory environments, and increasing competitions, are impacting the coworking space industry. These factors are leading to a higher operating costs for coworking space operators and making it difficult for them to compete with traditional office spaces. 

Also Read: Top Cities to Start a Business in India

Future Outlook: Prospects for Coworking Spaces in India

The effects of the pandemic and the emergence of hybrid work have led to coworking being one of the fastest-growing businesses, and beyond 2023, this growth is only predicted to continue. The coworking sector is currently growing at a rate of 3%; in the following 5-7 years, this rate is predicted to increase to 18 to 26%. 

The future prospects of coworking in India are very promising and the best coworking spaces software is facilitating the growth of coworking, thanks to the country’s rapidly growing startup culture, increasing demand for flexible work arrangements, and the rise of freelancers and independent professionals. Coworking spaces provide a cost-effective and flexible solution for businesses and individuals who need a workspace but do not want to commit to long-term leases can avail of services from coworking space aggregators like Stylework who provide flexibility in terms of office space, duration, location, and more. 

The expansion of both international and local coworking operators in India further indicates a growing demand for these spaces. Overall, the future of coworking in India looks bright, and the market is expected to continue growing in the coming years. 

Also Read: Future Forecasts of Coworking Spaces

The advantages of co-working spaces are beginning to be understood by the Indian real estate market. It is a growing sector with the ability to address India’s real estate issues. To advance the market, the real estate industry is prepared to change to the freedom and flexibility provided by coworking spaces. There is no longer a need for consumers to browse for the “Best state in India for business” on the internet, due to the growth of the economy, especially in tier 2 and tier 3 cities, and the availability of coworking spaces owing to coworking space aggregators like Stylework. 

Co-working spaces act as the ideal location for working by bridging the gap between the requirements and desires of the community and by offering the best infrastructure that encourages work-life balance at reasonable costs.

Co-working is the fastest-growing area from lease patterns to modern technologies and will undoubtedly revolutionize the commercial real estate industry in India. 

Stylework has emerged as the paramount companies in the commercial & residential real estate sector. By 2025, 30% of all office space will be shared workspace, and by then we are expecting a 10X growth in all our verticals. As we believe, coworking is the ‘Future of work’.  And with coworking space aggregators like Stylework who have made an innovation or breakthrough as a service with its ‘Corporate Product Suite‘, can only be a boon to the co-working market and scale up its figures in the coming years. Users can make use of CPS capabilities including customisation, advanced employee and membership management, end-to-end process integration, office-space optimization, and better allocation of employees to workspaces. 

Our CPS app was created exclusively to make coworking simple and accessible to everyone. 

Also Read: Build Your Ideal Workspace Solution With Stylework

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Looking for an Office Space?

Explore the perfect workplace personalised to your needs across our 2000+ spaces over 80+ locations.

The SMS field must contain between 6 and 19 digits and include the country code without using +/0 (e.g. 1xxxxxxxxxx for the United States)

Frequently Asked Questions

1. What is coworking space in real estate?

The rise of the coworking sector has indirectly benefited the real estate market in the country. Coworking spaces are a reason why people are investing in real estate these days. Coworking spaces have changed the dynamics of commercial real estate in India, the leasing market too has seen an upswing. The coworking real estate is growing so exponentially that real estate investors are making sure to include coworking spaces in their real estate portfolios. 

2. Is coworking space profitable in India?

Yes, coworking spaces are profitable in India; the sector hits breakeven early due to the surge in demand. If the company begins operating at full capacity or occupancy, the profitability and coworking growth are even more assured. The possibility to monetize empty space is one of the primary elements influencing coworking’s emergence as a lucrative market.

3. What are the best strategies for finding the right coworking space?

Choosing a suitable coworking space that best suits your needs can be a challenging task. Individuals’ requirements for co-working vary.  However, there are a few fundamental strategies you may employ to narrow down your options for a coworking space, like security, accessibility, location, affordability, flexibility, facilities, and other factors. 

4. What is the size of the co-working space market in India? ,

Currently valued at USD 1.78 billion, India’s Co-working Office Spaces market is expected to grow at a CAGR of more than 7% over the next five years.

5. What are the advantages of coworking spaces for businesses?

Working in a office spaces environment has several advantages, the benefits of coworking spaces include the chance to network, exposure, sharing of resources and expertise, an improvement in productivity and efficiency, cost savings, an encouraging working environment for learning, and much more.