By 2023, We’ll Double Our Coworking Footprint

In less than a decade of its inception, Bangalore-based proptech company, BHIVE has established itself as one of India’s largest coworking space providers with i million sq ft of space and over 24000 seats besides setting up a successful fintech investment platform.

In this exclusive interview with Torbit Realty, SheshRao Paplikar, CEO & Co-Founder, BHIVE Group talks about company’s evolution from a pure play managed office spaces to highly advanced tech-enabled office spaces including the unique campus model , besides underlining the challenges, prospects and investment opportunities in commercial real estate. Excerpts………….Vinod Behl

What is the brand equity of BHIVE and what sets it apart from other players in the Coworking segment?

BHIVE Workspace is a PropTech company focused on commercial real estate (CRE). As the oldest coworking label in the Silicon Valley of India, we are now the largest chain of leading co-working spaces across the prime locations of Bengaluru. It is one of the India’s largest co-working space with 1 mn sq ft of space and over 24000 + seats.

We are constantly evolving over the last 8 years of our inception, reinventing and designing quintessential workspaces for companies looking out for inspiring, hassle-free, and fully tech-enabled office spaces. The year 2021  was marked with our entry into the managed office space with our flagship product called “HoneyKomb” by BHIVE. Beyond advanced co-working spaces, we have entered into the ecosystem of providing flexible leasing products and a fintech investment platform for CRE.

We are also the first co-working space to start  campus model. The evolution of our offerings from pure-play managed office spaces to building an ecosystem where people could work, play and entertain eventually culminated in the establishment of BHIVE Workspaces. The first such facility has been established in HSR, Bengaluru which is the country’s largest co-working campus, infact in the world which is unique and sets us apart. Spread across 2 acres and located in the heart of the city , the shared office space offers 8000 seats and a multitude of retail offerings including food and beverage, sports arena and entertainment options. The aim is to cater to the growing demand for flexible office spaces post the pandemic and strengthen our brand position as a preferred shared office space provider.

How do you look at the performance of the Coworking segment in 2022 with key trends and what are your expectations in 2023?

The Indian co-working industry has been growing by leaps and bounds on the back of a cost effective offering, burgeoning start-up base and rising office rentals across business districts to name a few. As one of the leading players in this space, we have grown significantly over the years and built a strong base of leading occupiers. It is one of the best years for our Industry, with 30% absorption happening through co-working space.

This growth is likely to continue, Many companies have understood about co-working and now we don’t have to convince why to take co-working instead of traditional space. However, the market is expected to see a correction with the global economy and a funding crunch. Having said that, established players like BHIVE will continue to attract marquee  occupiers with their differentiated offerings of the right location, property and amenities, thereby leading the growth of the co-working industry.

 How has been BHIVE’s journey/track record as a  commercial real estate investment platform for upper middle class retail investors , HNIs and NRIs? What’s its future scope considering that millennials are increasingly opting for comprehensive and curated investment solutions platforms?

Bhive Fund is a fintech platform that is helping people invest into real estate. So, we are certainly into investing in commercial real estate and related investment opportunities. We are almost close to 100 crores of assets in management and most of this has been achieved over the last 12 months. We are witnessing a positive trend of referrals and repeat investments.

This trend is aided by the radical change in the thought process and perspective of millennials compared to the older generations. Where traditionally, investments in real estate were made for security, now the young generation views it purely as an investment.

So, this is changing the behavioral pattern and people approach investments purely as investments rather than a security. For millennials, investments need to give a good return and they are able to decouple this. When this decoupling happens, platforms become more important because we are able to give them an accurate risk analysis.

 What has been the response to your newly launched Rs 400 crore AIF ? What is your capital deployment strategy? How  attractive are the AIFs for investors in view of the  access they provide to institutional quality assets and the IRR they generate?

We have received commitment of INR 240 Cr for our 400 Cr AIF Scheme – BHIVE Commercial Real Estate Opportunities Fund Series 1. We will deploy this capital to curate prime commercial real estate properties. The category II close ended fund will offer a unique opportunity to high net-worth individuals (HNIs) and Family Owned Businesses looking to participate in the commercial real estate growth story. The deployment of  into commercial office real estate  will enable us to create world class infrastructure for start- ups and IT companies.

According to industry average, investments in commercial real estate yield a return in the range of 8-11% as against 2-3% returns in residential real estate. In contrast, BHIVE’s AIF II is helping customers generate double the yield of 20-24% with relatively low investment risks, which is a first in the industry. Since the capital is deployed in fully completed properties with all approvals, the risk to principal invested is also low. There is no construction or approval risk which was the bane of real estate investment schemes launched by other funds earlier.

AIF II  will offer investors the opportunity to invest in Grade-A premium office spaces and earn attractive returns even with small ticket investments in line with our   mission to make highest quality commercial real estate properties accessible to retail Investors with superior risk adjusted financial returns.

 Post-covid,  start-up companies are facing tough times especially due to weak funding pipeline. What kind of challenges and prospects do you foresee for them, particularly start ups like yours? 

We are looking at a term called ‘funding winter’ where funding has dried up or reduced due to the slowdown in the US and not because of the Indian economy. Fundamentally, the Indian economy is resilient. But a lot of foreign money comes into start-ups. Today, the biggest challenges are being faced by companies in the late stage that are planning to go for IPO. IPOs have been delayed because capital markets are not doing well which is also affecting the pre-IPO financing.

The early stage funding is still doing well and companies which are able to manage a lot of runways well are still making investments.Bhive workspace is profitable and we are confident that it is not going to face any of these issues. Our fintech entity does raise capital but because of our experience in running start-ups, we do not operate in a high-burn model. Our fintech burn rate is significantly low and we still perhaps have a good 18- 24 months of runway.

  How attractive is real estate vis a vis other asset classes for investors? Which real estate classes, according to you, will generate the highest returns in 2023?

The intricacies of the real estate industry are a little difficult to understand or predict. Commercial real estate is doing really well. But there are so many segments in commercial real estate be it malls or hotels or office spaces or warehousing. The shift and demand are significantly higher and might continue to grow in the next few years. Office space and warehousing are also growing. However, one cannot make a general assumption and before you go for any investments, it is important to understand the  nitty-gritty of it.

My experience is in the office space and especially in Bangalore, therefore, I am very bullish regarding it. There is growth in residential real estate as well. Overall, one can confidently say  that we will see a good growth in many different segments of real estate.

Going forward, what are your business/expansion plans ? Beyond Bangalore, what newer geographies do you plan to enter ? 

Currently, we have crossed one million sq.ft and all of it is in Bangalore. We are evaluating and hopeful to get to the next million by next year. We would consider expansion beyond Bangalore may be in 2024 and this would be done is a very planned and phased manner. Our focus is primarily on tier 1 cities at this stage. However, its still in the planning stage.