Despite a failed IPO plan in the US, WeWork is growing by leaps and bounds in India, a market which is going through one of the worst real estate crisis ever.

WeWork in India is a joint venture between the We Company that owns the WeWork brand and Embassy group, owned by Indian real estate billionaire Jitendra Virwani.

Virwani’s son and scion of Embassy Group empire is the man running the WeWork India operations. The Embassy group owns about 90 per cent of shareholding in the JV.

“On macro level, commercial office space absorption over last 5 years has been on the rise. In fact, it’s been the highest this year and we see it continuing to trend upwards over the next few years. We want to position ourselves as an alternative to traditional office space,” Karan Virwani, CWeO, WeWork India, told BusinessLine .

Co-working spaces are still less than a percentage of overall commercial office space in India. Virwani sees a potential for the segment to capture 5 per cent of that share. “Even at 5 per cent of commercial space, we see enough headroom for growth for us. We are now working on the path towards profitability,” Virwani said.

Enterprise clients

One of the biggest drivers for this growth is enterprise clients. Companies like Spotify, Twitter India, Discovery India, OnePlus and even Zee Entertainment have been moving large parts of their offices to WeWork, making for better occupancy levels, longer term contracts and better business visibility for the company.

“We have seen a surge in long-term commitments from clients. Last week, we signed a 6-year deal from what was a month-to-month subscription. People are seeing WeWork as a permanent solution to workspace. Several companies are also seeing us are their HQ, offices for sales, some financial companies are using us as a trading floor,” said Virwani. OnePlus is one such firm that’s using WeWork as their India HQ.

“OnePlus is a brand driven by the passion and zeal of its members and community. We look to never settle and actively promote a strong entrepreneurial spirit among our members. These aspects urged us to choose WeWork as our working space. WeWork’s cultural values truly resonate with us and further boost our vibrant work environment. We are truly excited about this move to a more enriching work space, and look forward to continuing our association with WeWork,” said Vikas Agarwal, General Manager, OnePlus India.

Operating in 28 buildings across the country, WeWork India has already turned profitable at operational level and if the trend continues, the company expects to turn net profit by next year itself. “Within 12 months of launching a building, we get to stabilised occupancy. By the 9th month, building are already breaking even. On operational level, we are already break even and even in the green. At a net profitability level, we expect to turn green by next year,” said Virwani.

There’s no shortage of demand, according to Virwani. The business is booming both from Enterprise client side as well as startups. The only challenge is however to scale faster, which is a capital intensive exercise.

“About 70-80 percent grade A real estate is controlled by 16 developers and we have deals with 13 of them. We control 40 percent of co-working market share. That gives us a big competitive advantage,” said Virwani.

“The only challenge is that it is a capital intensive business. It can either constraint you or put you up in an advantageous position.”

Last year, WeWork India had 35,000 desks. Virwani is confident that it will double before the end of 2019. The number of desks have already touched the 52,000 mark in 28 locations.