ICRA expects five co-working segment IPOs raising over ₹7,000 cr by 2026

Rating agency ICRA on Wednesday said that India's co-working segment may witness five maiden public issues in the next 12-18 months to raise more than Rs 7,000 crore.

In a statement, ICRA said that India's flexible (flex)/co-working office space portfolio is expected to increase to around 125 million square feet by March 2027 (from around 80 million square feet as of December 2024) for the top six cities (Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR) and Pune).

"This segment, which has seen one successful initial public offer (IPO) in 2024, is set to witness five major IPOs in the next 12-18 months, which are projected to raise over Rs 7,000 crore," it added.

Co-working operator Awfis has already launched its IPO and is listed on the stock exchanges. Smartworks, WeWork India and IndiQube Spaces Ltd have already filed the preliminary documents with markets regulator SEBI to launch their IPOs.

Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA, said: "The demand for co-working spaces has increased at a brisk pace - driven by flexibility, short-lease tenures and lower upfront cost in terms of capex for tenants."  As of December 2024, there are over 450 co-working and flexible space operators in India with more than 2,000 centres. IT/ITeS firms have been the leading demand contributors for flexible workspaces, followed by engineering and manufacturing, and startup companies over the last two to three years.

Commenting on the ICRA's forecast, Peush Jain, MD-Commercial Leasing and Advisory, Anarock Group, said, "The increase in supply of flexible office space signals a growing shift by corporates towards adoption of hybrid working to optimise cost and ensure workforce efficiency while also allowing companies to expand their presence across markets."  To meet this growing demand, he said managed office space providers have been tapping the market for funds to expand their businesses.

Vibhor Jain, Founder and CEO of Carbon Guardians, said, "it is inspiring to see such dynamic growth and innovation. However, while the market is brimming with players, we believe there is still a gap when it comes to the depth of quality and long-term sustainability offered by the operators."  The next phase of growth will not just be about scale, but about raising the bar on experience and enduring value for clients, Jain added.

Abhijith Shashidhar, CEO & Cofounder of Clayworks Spaces, said, "The rise of nano and micro GCCs (global capability centres) is a big part of what's driving this sharp increase in office space demand we are seeing work evolve to be more flexible, focused, and agile, and real estate needs are shifting with it.