WeWork India revenue grows 70% to Rs 1,300 crore in 2022 on high occupancy

WeWork India CEO Karan Virwani

Flexible workspace company WeWork India’s revenue has grown by 70 percent to around Rs 1,300 crore in calendar year 2022, chief executive officer Karan Virwani told Moneycontrol. The company is also on track to log an EBITDA of Rs 180 crore in CY22, compared to an EBITDA loss of Rs 120 crore last year, he added.

“We will be at 6.5 million square feet (msf) of space and 76,000 desks by the end of March 2023. The portfolio is at about 90 percent occupancy across markets, with buildings making healthy margins,” said Virwani.

“There’s a huge conviction in this space right now. We are seeing a demand from companies like ICICI Bank, Grant Thornton and Commonwealth Bank of Australia who would be typically expected to go and take their own office space,” he added.

WeWork India is a joint venture between domestic commercial realty major Embassy Group and WeWork International that owns 27 percent of the company.

The company expects revenue to grow 50-70 percent next year, driven by the 90 percent occupancy levels and the extra capacity of 20,000-odd desks it is looking to add during the period.

The workspace company currently operates in six tier-1 cities across 41 locations. It plans to enter Delhi next year and limit its expansion to the top 6-8 cities over 3-5 years.

“The flexible workplace segment as a part of the commercial workspace market has doubled to 8-9 percent in the last two years. I think this can easily go up to 25 percent, which would be about 150-250 msf, in the next 5-8 years,” said Virwani.

According to him, small and medium enterprises are one of the most important growth levers for the company — as they tend to double their requirement within a year. However, the enterprise segment still accounts for 70 percent of WeWork India’s business while the rest comes from MSME and start-ups.

Although many tech companies and a few MNCs have been on a layoff spree in the last few months, WeWork India has not yet seen any major impact in demand.

“With companies trying to convert their fixed costs into variable costs, we are actually seeing them adopt or model faster. From the point of view of US companies, it’s actually cheaper now to have offices in India as the average rentals have remained the same whereas the dollar has appreciated compared to the rupee,” said Virwani.

One of WeWork India’s big deal wins in 2022 was Grant Thornton which has taken up flexi workspace for 12,000 employees. What this means is that 70 percent of those employees can get a desk in the rented workspace on any given day, and the allotment will happen on a first-come-first-serve basis.

Apart from getting a recurring rent on this space, WeWork India will charge an additional cost for any top-ups requisitioned on a monthly basis.

Virwani said that the company is looking to become more asset light by experimenting with different operating models. Also, for about 60 percent of its deals, the company shares its capex spends with landlords. At some of the properties, WeWork has tied up with landlords in a hotel-like model where the company takes just a 10 percent cut to do the sales and design, with the landlords keeping the rest of the revenue from bookings.