Co Working Platforms On A Growth Spree
Uber and Airbnb continue to be the darling of investors worldwide, in less than a decade both the companies have grown by leap and bounds, valuing Airbnb at US$25bn and Uber at US$62bn at the last fundraising round. From a humble start in 2008, Airbnb has scaled up to 190 cities and Uber, launched in 2009, now operates in more than 300 cities across 60 countries, with more than one million drivers as freelancers.
This kind of hyper growth and simultaneous adoption by the market took everyone by surprise; digging deeper everyone realized that Uber and Airbnb are the first companies to ride the ?Shared Economy? wave. Although shared economy has grown significantly globally, latest estimates suggest that less than 5% of total users have used it, leaving plenty of headroom for future growth, and it is expected to grow by 20 times in next ten years, outgrowing the traditional rental sectors.
The common thread between the players of shared economy is connecting the two parties directly, a gainful sharing of excess capacity and increased productivity.
At the current numbers, the global real estate market is US$12.9tn in size, according to DTZ Research, and BlackRock projects that it could grow to US$23.9tn by 2020. Real Estate as an asset class is gaining more traction with investors, as more wealth gets added to the kitty every year. Global Institutional Rebalancing Survey by BlackRock in 2015 found that more than 50% of the 169 respondents were planning to add to their real estate holdings. At the same or a higher pace, globalization of real estate investing is taking place. Real estate investment across the countries is up nearly three times from five years ago, totalling US$280bn in 2014 as per Real Capital Analytics.
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Despite being the Godzilla of all opportunities in size, the commercial real estate market is fractured by years of legacy play and both the tenants and landlords are unable to generate higher returns. With the growing global market for real estate securities and REITs, currently, at US$1.2tn in size, the investors and market forces will push for better utilization of ?idling capacity? of assets.
Our take is that they will look towards shared economy as the solution. The market is changing too; owners of real estate assets have become less conventional in how they lease their properties. We at AntzPower believe that online platforms will make it easy for SMEs and startups to lease office spaces without the traditional caveats of lock-in periods and other hassles, ushering higher utilization and productivity. The hotel chain Marriott?s saw the benefits of collaborating with an aggregator to rent out its unused conference spaces for short-term needs (as short as an hour), to minimize underutilization.
Lawmakers are also throwing their weight behind shared economy; this week the European Union executives gave thumbs up to the ?sharing economy?. The Commission stated that ?Absolute bans and quantitative restrictions should only be used as a measure of last resort,? Though it is not legally binding, the recent guidelines make an attempt to define a single European approach towards the hyper-growing sector instead of the random responses from some of the European cities till date. Sharing economy based models are here to stay and now with backing from government bodies, it is set to move even faster.
Taking cues from the Millennials? evolved need for shared, collaborative & innovative workspaces, many startups are coming up as the Airbnb for shared workspaces. With the ?idled resource salvaging? concept, they welcome landlords and office owners with idled spaces (for example a desk or room) to list on their platform and rent out to startups and SMEs members that are usually priced out of having offices in prime locations in the city.
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It is clearly evident now that all types of professionals gain enormous benefits from the shared spaces and collaborative ecosystems. Startups and SMEs on this platform are tightly synced with each other through a proprietary technology platform. There is a host of events, workshops and investor meetups to further nurture an entrepreneurship fostering community that creates a win-win situation for all. Also, with the ?idled resource salvaging? concept, members are business matched into an office of a complementary industry. Through this model, members gain not only workspace but also real life coaching and mentoring from the office owners.
The resulting synergy and focus on supporting startups and SMEs along the path of success are fuelling demand for such listed centres in the best startup markets in Asia. Capitalising on this, many such startups plan to scale the platform to other Asian hubs like Taiwan, Korea, Thailand, Indonesia and Vietnam in the coming months. Through listing with such co-working platforms, real estate owners can reduce the ?idling capacity? of their assets and maximize productivity.
Jappreet Sethi
