India’s co-working industry begins to take roots: Survey

V Nagarajan

The Indian co-working story has firmly taken root in India’s foremost office markets since 2017. Initially tailored to attract the quintessential startup with their pay-by-day and plug-and-play premise, co-working companies have now graduated to fulfilling the office space requirements of the mainstream occupier.

Today, the membership roster of India’s premiere co-working operators is dominated by Fortune 500 companies and the top companies listed in the country’s stock exchanges, according to a survey by property consultants Knight Frank India. Co-working is an arrangement in which workers of different companies share an office space, allowing cost savings and convenience through the use of common infrastructure.

The co-working engine was fueled by private equity investors looking to cash in on a high growth opportunity. This growth capital spurred an expansion spree that saw co-working operators claiming nearly 13% of the total office space transacted during 2019.

While there are over 250 co-working players operational in India today, an estimated 75 - 80% of the market in the top eight cities is dominated by the top 10. Their value-added proposition of a flexible and hassle- free offering continues to see robust demand in the eight cities.

The space taken up by co-working players has nearly quadrupled since 2017 to a little over 8 million sq. ft. or 0.75 million sq. m in 2019. Its share in transactions has steadily grown from 5% to a significant 13% of the total area transacted in the office space markets of Mumbai, NCR, Bengaluru, Pune, Hyderabad, Chennai, Ahmedabad and Kolkata during this period.

The spurt in space taken up by the co-working operators has been complimented by a comparable rise in their revenues. Gross revenues of the co-working business in India have more than doubled since 2017 to an estimated Rs34 billion or $470 million in 2019. The top co-working operators have been able to maintain stabilised occupancy levels at over 75% while steadily increasing membership rates.

I have been posted in the Gulf for a limited period.  I invested in a new project while in India and also own another apartment in my home town at Chennai.  What are the tax implications on the home loans?  Kindly clarify.  Prakash Raman, Sharjah.

 If you own more than one house, only one property can be considered as self-occupied.  The other property will have to be considered as ‘deemed to be let out’.  

The deduction for home loan interest paid on purchase of a self-occupied property is restricted to Rs 200,000.  

However, for a let out property or deemed to be let out property, the entire interest paid for purchase of the property is allowed as a deduction without any limit.

The loss, if any, can be set off against salary or other income during the same year.  My relative is planning to gift the commercial property located in Mumbai.   She is a PIO and settled in US.  Are there any restrictions in this regard?  Sunil Almeida, Dubai.

 We are planning to undertake real estate development in India.  As we are stuck with the acquisition and conversion of land, how do we resolve this issue?  Margaret, Dubai

 As the city has not been specified we are assuming that for residential development, conversion of wet land is subject to the development control regulations of the particular state government.  It is not clear whether the land has been notified by the government authorities for acquisition purposes.  A clear picture would emerge on verification with the concerned development authority of the city by providing the survey numbers of the land proposed to be acquired.