Smartworks lease out 80,000 sq ft space to IT firm in Noida – ET RealEstate

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NEW DELHI: Co-working firm Smartworks has given on lease over 80,000 sq ft of office space, comprising more than 1,300 desks, in its facility at Noida to an IT-software company as corporates look for flexible workspace amid COVID-19 pandemic. Leading property consultant Knight Frank India facilitated this leasing deal, one of the biggest in the co-working space.

Smartworks, which has been founded by Neetish Sarda and Harsh Binani, currently has 31 centres, comprising more than 65,000 seats, across nine cities — Delhi, Noida, Gurugram, Mumbai, Pune, Kolkata, Chennai, Hyderabad and Bengaluru.

The company focuses on large corporates and its clients take on an average 250-300 seats. It charges on an average Rs 10,000 per seat, although the per-seat fee ranges from Rs 6,000 to Rs 30,000 depending on the location.

According to sources, Smartworks has leased more than 1,300 seats spread over 80,000 sq ft to a software company in its facility – Smart Work Corporate Park, sector 125 Noida.

Smartworks and Knight Frank India spokespersons declined to comment on this deal.

Last year, Smartworks had raised USD 25 million (about Rs 175 crore) from Singapore”s Keppel Land Ltd to fund its expansion plan.

Founded in April 2016, Smartworks Coworking Spaces Pvt Ltd has invested more than USD 20 million in the past three years to set up this business. It is profitable at an entity level.

Before the coronavirus pandemic, the co-working segment in India was growing at a rapid pace, but the office space demand was impacted significantly. Corporates deferred their expansion plan and also adopted work for home policy for their employees.

As a result, the Knight Frank recent report suggested that the gross office space absorption declined 35 per cent to 39.4 million sq ft across eight major cities in 2020 from 60.6 million sq ft in the previous year.

However, industry experts feel that the co-working segment will bounce back faster, with more and more corporates opting for flexible workspace solutions.

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Demand for luxury residences in Mumbai set to rise in 2021; prices to remain flat: Report – ET RealEstate

MUMBAI: The demand for luxury residences in Mumbai is expected to rise significantly in 2021, while prices are likely to see a flat annual price change despite the buoyancy in demand for the prime properties, said property consultant Knight Frank.

Prices of prime residential properties across the top 22 global cities, on average, are expected to remain static in 2020, before rising by 2% in 2021, Knight Frank’s Prime Global Forecast 2021 report said.

It expects 20 of the 22 cities to see prices remain flat or increase in 2021, a slight reversal of the trend seen in 2020, where analysts expect nine cities to end the year with lower prices.

“With the modest price correction in the Indian real estate sector, post-lockdown, the luxury market has seen significant traction. Buyers are responding favourably to residential purchase across segments including luxury as sale prices have corrected in the last few quarters making investment in property attractive. It is also not surprising that those markets that are already witnessing an economic rebound have moved higher in the rankings in this quarter,” said Shishir Baijal, CMD, Knight Frank India.

During the quarter ended September, Delhi’s prime residential market performed better than Mumbai and Bengaluru. Globally, the city ranked 27th with a 0.2% annual price change; with a sequential price decline of 0.1%.

Mumbai ranked 33rd with 1.3% annual price decline until the end of third quarter; the city also saw a sequential decline of 0.7% price change. Bengaluru property market ranked 34th with an annual price decline of 1.4% for the period with a 1.5% sequential price decline during the third quarter.

Shanghai and Cape Town lead the forecast for 2021 with annual price growth of 5% forecast in 2021 whereas Buenos Aires is expected to be the weakest-performing global city, with prime residential prices falling by 8.0% during the period.

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Little scope for IT companies’ realty cost saving led by work-from-home: Report – ET RealEstate

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MUMBAI: Saving real estate cost is unlikely to be a key variable to support the work-from-home model as Indian information technology industry’s annual real estate expenditure is just around 4.3% of its operating income, showed a Knight Frank India study.

According to an analysis of total 119 IT companies’ financial statements, smaller IT companies spend their 4.7% on real estate, followed by large IT companies at 4.4% and mid-sized IT companies at 3.6%. Overall, office space rent paid by IT companies constitutes 0.5% to 2% and the remaining is the cost incurred towards operating these facilities.

With consideration for an assumed 50% of employees working from home, net cost savings yielded for IT firms stood at around 1%. This is after adjusting for additional cost borne by IT companies for setting up the home infrastructure. In case of large IT companies with owned premises, this cost-saving will be even lesser compared to companies operating from leased properties, the report said.

“Going forward, we feel that the choice of work from home versus work from office will be decided by many other factors and not cost savings alone. While the savings on real estate operations expenses are marginal, this saving has to be measured against qualitative aspects of the business such as lack of control, retention and attraction of talent, competitive edge, data security etc,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Based on Knight Frank India’s survey with 1,600 employees of Information Technology (IT) & Information Technology enabled Services (ITeS) companies, nearly 90% of survey respondents miss their office environment while working from home.

In the share of employees who miss their workplace, NCR with 98% led the table followed by Mumbai with 94%, Bangalore 91%, Chennai 90%, Pune 88% and Hyderabad with 81% respondents missing the work environment.

The survey cited that 60% of respondents believed time saved due to no office travel, and 58% highlighted savings due to no cost of travel, as advantages for WFH. Whereas, in terms of disadvantages, 43% felt a lack of office driven social life and 42% cited difficulty to focus in an informal setting.

The Information Technology sector has been the key driver of India’s office market. It contributed 44% of cumulative office space demand in the last 10 years until 2019.

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Co-working operators start witnessing fresh demand after five months – ET RealEstate

NEW DELHI: Co-working and managed workspace operators have started witnessing fresh demand after a five month disruption due to Covid-19 pandemic as leading co-working players have reported reaching 50 per cent fresh leasing levels in July compared to the monthly average during the pre-Covid times.

Covid induced lockdown had impacted the co-working operators the most as a Knight Frank study says that around 3.2 million square feet (MSF) of flexible space is expected to be vacated by these operators in 2020.

“We used to transact 1500 seats every month on an average but business was impacted severely due to Covid-19 pandemic. Now we are back to doing 1000-1200 seats in a month,” said Amit Ramani, Founder and CEO, Awfis.

There are over 250 co-working players operational in India but the segment is dominated by top 10 players which have cornered around 75 – 80 per cent of the market share in the top eight cities.

The Indian Workspace Association (IWA) has said that its members have reported reaching 50 per cent occupancy levels.

“We continue to see contractual occupancy of the industry in between 40-50 per cent of what we were witnessing in pre-COVID times. Various players are also offering innovative solutions to suit the evolving needs of occupiers amidst the pandemic,” said a IWA spokesperson.

IWA represents leading companies like Vorqspace, WeWork India, 91 Springboard, BHIVE Workpsace and Awfis, among others.

WeWork did not respond to a separate email query.

Paras Arora, Founder and CEO of co-working operator Qdesq said that they transacted 1100 seats in July.

“We were transacting 1800 seats in March, and we believe we will get back to the same number by October. There was an impact on revenue due to lockdown. April to June fell by 50 per cent. In July, we saw a 10 per cent month on month pick up,” said Arora.

Managed office space provider Skootr said that there has been a dip of close to 10-15 per cent in the leased area, but leads have started coming in again.

“For us, the impact has been limited being a purely managed office player. Our clients are primarily MNCs and large corporates which have been able to sail through these turbulent times slightly better than few other companies,” said Puneet Chandra, Co-founder and Director, Skootr.

However, some of the co-working operators are witnessing slow recovery and expect demand to improve with the opening of public transport.

“The recovery is quite slow , but I won’t say that the market is not picking up . We are confident that once public transport, especially the metro starts functioning again, the numbers will get much better.

Earlier, we used to be at 90 per cent occupancy but post-covid it has come down to 10 per cent to 15 per cent,” said Akshita Gupta, Co-Founder and CMO of ABL workspaces.

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