WeWork's exit from India unit unlikely to impact domestic co-working market

The exit of WeWork from its India unit is unlikely to have an impact on the country’s co-working real estate market, according to industry executives.

The company last week received approval from the Competition Commission of India (CCI) to sell its entire 27.5 per cent stake in the India unit to Real Trustee Advisory Company.

The majority of the stake (72.5 per cent) in WeWork India is owned by Bengaluru-based Embassy Group.

Industry executives said there was a high demand for co-working space in India and investors were keen to enter this space, especially in India.

In a recent report, private-equity advisory firm Avendus said India’s flexible (flex) workspace market was projected to reach 126 million square feet (msf) by 2028, up from 61 msf in 2023.

Moreover, the successful Rs 599 crore initial public offer (IPO) of Awfis Space Solution Ltd, a co-working space firm, has turned investors more bullish on the sector.

“This momentum is not only sustaining but is also expected to accelerate in the coming years, underscoring the bright future of the flex industry,” said Sameer Singh, chief operating officer at co-working operator 91Springboard.

Manas Mehrotra, founder of another co-working space provider 315Work Avenue, said: “We believe that the exit will not create any short-term impact on investor sentiment in the sector because the overall performance of co-working has been powerfully consistent and positive in recent times.”

Singh added although it was a significant decision, it was “likely a reflection of the challenges facing WeWork globally rather than an issue with Indian operations or the flexible workspace market in India”.

“The exit will make greater space for more co-working players to gain a foothold in the market,” added Mehrotra.

Utkarsh Kawatra, senior director at Anarock’s co-working division myHQ, said WeWork India would continue to run and expand independently.

“The Awfis IPO has done exceptionally well. So if anything, everyone is more bullish about the industry,” he said.

“WeWork exiting was more a function of WeWork global and its financial troubles than of WeWork India.”

Awfis listed on the domestic bourses on May 30 with a premium of 13.5 per cent on its issue price.

Its chairman and managing director, Amit Ramani, recently said the company was looking to expand across new and existing markets, including smaller cities.

Sources say WeWork India is looking to list on the Indian stock market in 12 months.

However, its valuation is unclear. The company declined to comment on it.

WeWork India, which started operations in 2017, has over 8 million square feet of assets in 54 locations in New Delhi, Bengaluru, Mumbai, Gurugram, Noida, Pune, and Hyderabad.

In June 2021, WeWork Global invested $100 million in WeWork India to pick up a 27 per cent stake.