WeWork India turns profitable on top line of Rs 800 crore in Jan-Nov

Hybrid work models have aided commercial real estate firm WeWork India to turn profitable on a top line of Rs 800 crore in the January-November period of calendar year 2021, said Chief Executive Officer (CEO) Karan Virwani. 

The turnaround was possible as the company was able to strike more asset-light deals with landlords even as businesses sought to transition into a hybrid model of work.

“Next year, we are going to expand and go back into growth mode again. The start of 2021 was strong as we leased about 700,000 square feet of space in the first quarter (January-March) whereas the entire market did about 5 million square feet (msf). The second quarter (April-July) was tough because of the second wave, but demand has picked up since,” Virwani said.

“Business is growing really well. We are leasing about 250,000-300,000 square feet a month now and, over the course of the year, we have done about 1.7 msf of leasing. We are seeing the entire market coming back and enterprise demand being massive next year,” said Virwani. It plans to grow its business by one msf in 2022 — of which 50-60 per cent has been committed to customers. Footfall occupancy for WeWork India is at 70 per cent, with the number going up to 80 per cent for certain buildings. 

It operates in 36 locations across the National Capital Region, Mumbai, Bengaluru, Pune, and Hyderabad.  “The SMEs and MSMEs — who left us when they were at a capacity of 20 desks last year — are coming back and asking for over 50 desks. A large portion of the demand comes from firms which need 50, 100, or 200 desks,” said Virwani.

The flexible office space start-up had entered India in July 2017 through a franchise model with Bengaluru-based property developer Embassy Group. In 2019, the Indian promoters reportedly sought to sell a 70 per cent stake in the company to the global parent at a valuation of $2.75 billion. 

But that did not materialise as The We Company got embroiled in a series of problems such as de-valuation from $47 billion to $3 billion, a shelved IPO and alleged corporate governance issues. 

However, last year, Embassy pared its stake in the company to 75 per cent by selling 25 per cent to The WeCompany for $100 million. At present, the global parent owns 27.5 per cent of WeWork India.

In October this year, The We Company went public through a special purpose acquisition company (SPAC) listing at a $9 billion valuation. It had 575,000 memberships and 762 locations operating in 150 cities across 38 countries as of September 30, 2021. This excludes China, India and Israel — geographies where it has a franchise model in place, according to Fitch.