Market analysis of coworking centers in India
The relevance of research
The word ""coworking"" comes from the English ""coworking"", which means ""working together"". According to the study, the greatest demand is for universal coworking centers, mainly used for office work and equipped with the necessary office equipment (including the ability to use an MFP and make a photocopy or printout of a document has a significant impact)
Purpose of the study
Analysis of the state of the market of coworking centers, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market of coworking centers
Content
Part 1. Overview of the Indian market of coworking centers
1.1. Definition and main characteristics of the analyzed market
1.2. Dynamics of the Indian market of coworking centers, 2015-2019
1.3. Market structure by type of service provided in India
1.4. Market structure of co-working centers by Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity
Part 2. Competitive Analysis in the Coworking Market in India
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Analysis of the consumption of services of coworking centers
3.1. Consumption volume dynamics
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis
Part 4. Assessment of factors of investment attractiveness of the market
Part 5. Market forecast for coworking centers until 2024
Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators
Research excerpt
Part 1. Overview of the Indian market of coworking centers
1.1. Definition and main characteristics of the analyzed market
The word ""coworking"" comes from the English ""coworking"", which means ""working together"".
Coworking centers are usually divided into the following categories:
Universal centers providing their services to all interested consumers. This category is most in demand among freelancers who want to focus on completing their tasks and not be distracted by extraneous factors, as well as among small companies for which renting a full-fledged office is unprofitable. As a rule, centers of this type offer, in addition to directly renting space, the possibility of using office equipment, connecting to the Internet, as well as meeting rooms.
Industrial (craft) coworking. These are specialized centers equipped with specific equipment: for example, sewing. In India, as of the end of 2019, this area has a low demand, which is associated both with the specifics of business organization and with the mentality of citizens.
Creative workshops. In this segment, customers are given the opportunity to reveal their creative potential. The interior and arrangement of the coworking space of this sub-segment was initially thought out and implemented in a free style and aimed at maximizing the disclosure of potential customers. Often, workplaces do not involve standard office chairs, but soft sofas, on which it is possible to work in an informal setting, incl. even lying down.
Children's centers. This segment combines co-working spaces that provide places for parents with small children to work. On the territory of such centers there is a play area in which you can leave children, while the mother or father of the child is engaged in work. Currently, this type of coworking space is not widespread in India, despite the high demand and potential in this sub-segment.
...
1.2. Dynamics of the Indian market of coworking centers, 2015-2019
Consider the dynamics of changes in the volume of the market of coworking centers in India for the period 2015 - 2019.
The analyzed market belongs to the category of rather young ones.
...
Diagram 1. Dynamics of the volume of the coworking market in value terms in India, 2015 - 2019, million Rs.
1.3. Market structure by type of service provided in India
According to the study, the greatest demand is for universal coworking centers, mainly used for office work and equipped with the necessary office equipment (including the ability to use an MFP and make a photocopy or printout of a document has a significant impact).
The share ratio is shown in the diagram below:
Chart 3. Market structure of coworking centers by types, %, 2019
Universal co-working centers are the most popular, their share is …% of the total market.
...
1.4. Market structure of co-working centers by Union Territories
According to the analysis, as of June 2020, the largest concentration of existing coworking centers is in …
As follows from the above diagram, the dominant market share is occupied by …
1.5. Assessment of current trends and development prospects of the studied market
As of early 2020, the Indian coworking market is far from saturated.
Landlords in the coworking segment are not experiencing problems with the influx of customers, despite the difficult current situation in the rental market. The analyzed market is young and actively developing, the current demand in the market exceeds the available supply.
The development of the market is largely due to both the general development of the economy in India (and, accordingly, the increase in the number of consumers who want to use the temporary office rental service), and the increase in the number of freelancers who need a job outside the home.
The key trends in the current Indian coworking market are as follows:
...
Separately, it should be noted that there is a very high demand for such a subspecies of coworking center services as short-term rental of meeting rooms.
Most co-working spaces are located in business centers and retail and office buildings. A small number of areas offered for rent are located on the territory of industrial buildings, shopping centers and housing stock.
...
In India, financial and IT companies, creative agencies, and foreign organizations are increasingly interested in coworking spaces. Also recently, collective offices began to rent state structures.
1.6. Assessment of factors affecting the market
Let's consider the main factors influencing the market and, accordingly, the demand of the coworking market in India.
GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used. It is the main, most complete official indicator of public welfare. The absolute and relative values of GDP give an idea of the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country.
...
Let's take a look at some experts' assessments:
...
Table 1. Expert forecasts for the decline in real GDP in India in 2020, %
Thus, experts differ significantly in their opinions about the real dynamics of GDP
...
The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money.
...
Rate of inflation.
...
Chart 8. Dynamics of the inflation rate in India, 2015-2020 (5 months), %
The development of office real estate construction in India. Because co-working centers are being opened both on existing office space and on newly commissioned ones, the development of the construction of office buildings in India has a significant impact on the analyzed market.
...
Development of transport infrastructure. An essential factor when choosing a coworking space for end users is the transport accessibility of the chosen office, especially taking into account the specifics of the difficulty of traffic during peak hours in large cities.
...
Social factors
...
Increasing level of urbanization.
Urbanization in India has the following features:
intensification, concentration, versatility of urban activities in agglomerations and cities;
the urban way of life is spreading not only in large centers, but also beyond them;
formation of large-scale urban agglomerations;
gradual transition from single centers to strip, nodal, linear agglomerations;
an increase in the radius of settlement outside urbanized areas that are associated with recreation areas, industrial areas.
The migration influx to large cities leads to an increase in the concentration of potential consumers of coworking centers in them. Additionally, it should be noted that the level of urbanization contributes to the development of the population's need for non-residential facilities and stimulates this area of construction.
Indian mentality. According to the analytical study, the specifics of the Indian mentality has an impact on the analyzed market.
Influence of fashion trends. Currently, a significant number of large coworking centers position their services not only as an opportunity to work in comfortable conditions, but also as an opportunity to communicate with a large number of creative personalities.
...
Thus, at present, according to the totality of the considered economic and social factors, the following is observed:
...
Technological factors
Implementation of scientific developments and technological equipment. In large cities, potential clients, when choosing a specific coworking space, pay significant attention to the range of additional services provided, which include the technological equipment of the space offered for rent.
...
Information awareness and advertising. A significant factor, especially for large settlements, is the ability to remotely obtain the most complete information about a potential short-term lease object.
...
Process automation and software implementation:
...
Political factors
Governmental support. The Government of India has not formally declared specialized support for enterprises engaged in the provision of office space for short-term lease. Companies have the right to receive additional support only within the framework of the general program for the development of the country's economy. Getting subsidies in the analyzed market segment is a rather complicated and lengthy process. As the analysis showed, in most cases, only companies affiliated with state structures succeed in this.
Foreign policy relations determine the vector of export development, the geography of raw material supplies, as well as the economic situation in the country.
...
Concluding the assessment of the factors of influence on the Indian coworking market, we will summarize the key ones in the framework of the STEP analysis.
As can be seen from the results of the analysis, the negative impact of environmental factors is quite large. However, given the high demand for the analyzed coworking service, in total these factors only have a deterrent effect.
In general, the impact of macro factors on the coworking market can currently be assessed as a negative strong force. A group of economic and political factors has a negative impact. Most of the social and technological factors are also negatively affected.
Factors such as process automation and software implementation, urbanization of the population and fashion trends have a positive impact.
Table 5. STEP analysis of factors influencing the coworking market
1.7. Analysis of sectoral indicators of financial and economic activity
According to Rosstat, the gross margin of the coworking center industry is lower than the gross margin of all sectors of the economy. According to GidMarket calculations, the gross margin of coworking centers in 2019 is …%, which is by … p.p. lower than that of all sectors of the Indian economy.
The formal values of the current liquidity in 2015-2018 of the coworking centers industry, calculated on the basis of official data, indicate a rather low solvency of the industry.
The absolute liquidity ratio shows what proportion of short-term debt obligations will be covered by cash and cash equivalents in the form of marketable securities and deposits.
...
Table 7. Absolute liquidity in co-working centers in comparison with all sectors of the Indian economy, 2015-2019, times
In the analyzed period, business activity (average receivables turnover) in the field of coworking centers was within ... days, which is significantly lower than in general for all sectors of the Indian economy.
Part 2. Competitive Analysis in the Coworking Market in India
2.1. Major players in the market
The coworking market in India is characterized, on the one hand, by a shortage of supply, on the other hand, by a large number of players (the latter is especially typical for million-plus cities). It should also be noted that for a significant number of market players, the provision of coworking services is not a unique option. Along with it, companies provide their available space on standard lease terms.
...
2.2. Market shares of the largest competitors
The rating of the main players in the coworking market is headed by the company XXX,
...
Diagram 17. Shares of the largest competitors in the coworking market in 2020
2.3. Profiles of major players
LLC ""XXX""
...
LLC ""XXX""
...
XXX
...
Estimating the total revenue of the market leaders is complicated by the fact that market operators provide data on revenue volumes for the company as a whole, without a breakdown by industry, as well as the region of presence.
As follows from the diagram, the overall dynamics is characterized by a clear positive trend, which corresponds to the situation in an actively developing market. At the same time, the revenue growth rate of the main players is slowing down, which is a consequence of the emergence of new players on the market.
Part 3. Analysis of the consumption of services of coworking centers
3.1. Consumption volume dynamics
Based on the specifics of the studied market, the coworking service is the most in demand in large cities. In regions with low population density, the market does not yet have the potential to develop.
Given the above, the overall consumption of coworking services per capita is quite low.
3.2. Market Saturation and Estimated Market Potential in India
The main target audience of this service is divided into two categories. The first should include self-employed citizens (""freelance""), mostly young and middle-aged. The second category includes small firms that are not able to rent office space on a permanent basis due to economic feasibility. Separately, it should be noted the high demand for the second segment of services for the provision of flexible rental of meeting rooms and conference rooms.
The general development of the economy in the country and the expected increase in the standard of living of Indians in the medium term are prerequisites for the further successful development of the flexible office space rental market.
Statistical analysis allows us to state that in the period from 2015 to 2019 in large cities of India there is an active shift in priorities for many representatives of creative professions from working at home in favor of co-working centers.
...
GidMarket analysts estimate the expected growth of the market at least five times the current level.
3.3. Description of consumer preferences
As of the beginning of 2020, the audience of coworking centers cannot be called wide.
...
3.4. Price analysis
Prices for coworking are differentiated depending on the type of service provided. Most companies offer a fairly wide range of options, ranging from hourly rent of an unsecured workplace to a long-term contract for an individual office.
The table below shows the consumer price index for coworking center services.
Diagram 23. Cost of 1 workplace in coworking 2015-2019, Rs./month
The average price for the services of co-working centers in India in 2019 amounted to … Rs./month. 1 workplace. The highest price is in…
....
Part 4. Assessment of factors of investment attractiveness of the market
The positive factors of the investment climate prevail over the negative ones. A comprehensive assessment of the factors of investment attractiveness is ... points - a neutral investment climate.
...
Part 5. Market forecast for coworking centers until 2024
Macroeconomic factors, affecting the country's economy, affect the solvency of citizens and, as a result, consumer demand for rentals, including flexible rentals in the coworking format. The development of the market is built on the basis of trends and tendencies that are gaining momentum, but only with time it becomes clear which of them really acquire a large-scale effect, and which ones are temporary and local.
According to the majority of analytical companies, the market of coworking centers is in its infancy and is far from being saturated.
...
Forecasting the development of the coworking market in India is impossible without understanding the economic situation in the country…
...
Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators
The coworking space market in India is in a phase of explosive growth. As of 2020, this industry is developing very actively in India and is comparable to the pace of development in most European countries.
...
Entering the industry requires significant financial outlays: both for the acquisition of premises suitable for flexible lease, and for their refurbishment and technical re-equipment.
...
Diagrams
Diagram 1. Dynamics of the volume of the coworking market in value terms in India, 2015 - 2019, million Rs.
Diagram 2. Dynamics of the volume of the coworking market in India, in physical terms, 2015 - 2019, thousand sq.m.
Chart 3. Market structure of coworking centers by types, %, 2019
Diagram 4. Structure of coworking spaces by type, %
Diagram 5. Market structure of coworking centers by Union Territories, %, 2020
Diagram 6. Dynamics of India's GDP, 2011-2019, Q1 2020, % to the previous year, trillion Rs.
Chart 7. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan-May), Rs. for 1 US dollar
Chart 8. Dynamics of the inflation rate in India, 2015-2020 (5 months), %
Diagram 9. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people
Diagram 10. Population forecast in India for the period 2021-2024, million people
Chart 11. Dynamics of real incomes of the population of India, 2012-2019
Chart 12. Internet penetration dynamics in India, 2008-2019, %
Diagram 13. Profitability before tax (profit of the reporting period) in the field of coworking centers in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 14. Current liquidity (total coverage) in the field of coworking centers for 2015-2019, times
Diagram 15. Business activity (average period of receivables turnover) in the field of co-working centers, for 2015-2019, days
Diagram 16. Financial stability (security of own working capital) in the field of coworking centers, in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 17. Shares of the largest competitors in the coworking market in 2020
Diagram 18. Dynamics of the total revenue of the largest operators of the market of coworking centers (TOP-5) in India, 2015-2019
Diagram 19. Consumption of legal and attorney services per capita, 2013-2019, Rs./person
Figure 20. Life cycle stage of the coworking market
Chart 21. Frequency of using coworking center services, 2019, %
Diagram 22. Reasons why residents choose co-working spaces, %
Diagram 23. Cost of 1 workplace in coworking 2015-2019, Rs./month
Diagram 24. Forecast of the coworking market size in 2020 - 2024 – under the scenario of one quarantine, mln Rs., %
Diagram 25. Forecast of the coworking market size in 2020 - 2024 – under the scenario of two quarantines, million Rs., %
Tables
Table 1. Expert forecasts for the decline in real GDP in India in 2020, %
Table 2. Industrial production index by state of India (in % of the previous year), 2015 - 2019
Table 3. Population density in the largest regions of India, 2019
Table 4. Analysis of the impact on the industry of the state aid proposed to date
Table 5. STEP analysis of factors influencing the coworking market
Table 6. Gross margin of the coworking industry in comparison with all sectors of the Indian economy, 2015-2019, %
Table 7. Absolute liquidity in co-working centers in comparison with all sectors of the Indian economy, 2015-2019, times
Table 8. Main companies participating in the market of coworking centers in 2020
Table 9. Basic information about the company ""XXX"" LLC
Table 10. Basic information about the company XXX
Table 11. Basic information about the company LLC ""XXX""
Table 12. Basic information about the company XXX
Table 13. Basic information about the company XXX
Table 14. Consumer price index for services of co-working centers in India in 2014-2019, %
Table 15. Average prices for services of co-working centers in the Union Territories, 2019, Rs.
Table 16. Evaluation of factors of investment attractiveness of the market of coworking centers in India
Table 17. Forecast indicators for the basic and pessimistic scenarios for the development of the crisis, %
All reports