Updated March 14th, 2024 at 15:16 IST

Mumbai's coworking spaces see 27% rent surge since FY20

Major corporations like Google, Samsung, Rolls Royce Energy, Kotak Mahindra Bank, L&T, and others are now choosing flexible workspaces alongside startups.

Reported by: Business Desk
Mumbai sees highest coworking rental growth | Image:Pexels

Mumbai leads coworking: Mumbai stands out as a top performer amongst major Indian cities in coworking rental growth. The city has witnessed a 27 per cent increase in average monthly rentals per seat for flexi spaces since FY2020.

This surge indicates a growing demand for flexible workspaces, with average rentals per seat standing at Rs 15,900 as of the fiscal year 2024, compared to Rs 12,500 per seat in FY2020, according to the latest report released by MyHQ by Anarock.


Gurugram's growth trails Mumbai

Following closely behind, Gurugram experienced a notable 19 per cent growth in the same period, with average monthly rentals per seat rising from Rs 8,500 to nearly Rs 10,100. Meanwhile, Delhi, Bengaluru, and Noida recorded growth rates of 18 per cent, 15 per cent, and 14 per cent respectively in average monthly rentals per seat for flexi spaces.

Utkarsh Kawatra, Senior Director, myHQ, highlighted the growing significance of the Asia-Pacific region as a major market for coworking spaces. Kawatra stressed India's role as a hub for startups across various sectors, driving steady demand for flexible and economical workspaces.

The report forecasts a robust growth trajectory for the flexible office real estate market in India, estimating a surge from the current approximate size of 55 million sq ft to anywhere between 100 million to 140 million sq ft by 2030. Notably, since 2017, 34 million sq ft of fresh coworking stock has been added across key cities including Delhi, Mumbai, Gurugram, Bengaluru, Hyderabad, Pune, and Noida.

Coworking space | Image credit: Pexels


Big firms go flexible

In addition to startups, major corporations such as Google, Samsung, Rolls Royce Energy, Kotak Mahindra Bank, L&T, and others are increasingly opting for flexi workspaces. Coworking players like WeWork, AWFIS, COWRKS, and Oyo Innov8 are leveraging technology solutions to enhance workplace experiences, including asset and inventory management, on-demand meeting room bookings, parking automation, and smart visitors and access controls.

The report also highlights the important contribution of coworking spaces to commercial real estate absorption, comprising nearly 18 per cent of the total new office supply across the top 7 cities in CY2023. Despite the challenges posed by the COVID-19 pandemic, funding in the coworking sector has remained strong, indicating robust confidence in its future prospects.

Notably, flex workspaces have majorly contributed to office supply, comprising 20 per cent of the total addition in the past two years. Moreover, an average coworking centre spanning 20,000 sq ft has demonstrated financial returns, with an internal rate of return ranging from 40 per cent to 70 per cent. 

The shift towards hybrid work models is evident, with 70 per cent of companies embracing this flexible approach. 


Future favouring flex spaces

Looking ahead, industry professionals are optimistic about the future of coworking spaces, with two out of three experts anticipating a surpassing demand for coworking spaces compared to traditional office setups by the year 2030. 


Furthermore, the transformation is not confined to traditional office spaces alone, with hotels and F&B outlets increasingly venturing into coworking spaces to optimise revenue from daytime unutilised inventory.

With a projected growth to 65 million sq ft by 2024 and high occupancy rates ranging from 90 per cent to 100 per cent, the coworking market in India continues to demonstrate resilience.


Published March 14th, 2024 at 15:16 IST