India’s flexible office space sector has attracted $820 million in private equity (PE) funding since 2017, driven by growing demand from corporates seeking dynamic and flexible workspaces. According to a report released by Knight Frank India, investments in this sector have fluctuated significantly over the years but demonstrate overall solid growth potential. “From 2017 to 2018, investments grew steadily from $25 million to $49 million, rising sharply to $113 million in 2019, driven by investors like CLSA Capital and Peak XV Partners,” the report notes.

However, the sector faced setbacks due to the COVID-19 pandemic, with investments dropping to $11 million in 2020 and a further decline to $6 million in 2021. A strong rebound occurred in 2022, with PE funding soaring to $595 million, supported by significant deals from Hillhouse Capital and Actis. Despite this recovery, the investment dropped again in 2024, with just $8 million secured in one deal.

The report highlights that flexible office space operators have leased an estimated 52.9 million square feet (MSF) from 2017 to the first half of 2024, showcasing a compound annual growth rate (CAGR) of 22%. This surge reflects the increasing demand for adaptable work environments that cater to the needs of modern businesses.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasized the sector’s resilience and prospects. “India’s dynamic commercial real estate market, the industry’s resilience, and forward momentum are undeniable. With GDP growth projections for FY 2025 reaffirming India as the fastest-growing major economy, the demand for innovative office spaces is soaring,” he stated. Baijal also pointed out that occupiers are shifting focus from basic amenities to employee well-being, positioning flexible office space operators to meet these evolving needs.

The report also highlights the role of ESG (Environmental, Social, and Governance) principles and advanced technology in shaping the future of the flexible workspace industry. Baijal noted, “By embracing ESG principles and cutting-edge technology, the flexible space sector is not just keeping pace; it’s setting the agenda for the future of workspaces.”

The rapid growth in India’s flexible workspace sector is a testament to the country’s dynamic commercial real estate market, with operators continuing to innovate to meet corporate demand. This investment trend is expected to grow as businesses prioritize flexibility, sustainability, and employee-centric work environments in the coming years.

As the sector navigates these fluctuations, it remains well-positioned to thrive, leveraging its adaptability and the rising corporate need for dynamic, employee-focused office solutions.