Tuesday, March 5, 2024

Pakistani Co-working Space ‘Kickstart’ Secures Rs. 200 Million Funding for Expansion

Kickstart, a co-working space in Pakistan, has successfully secured an investment of Rs. 200 million from the Vital Group. This funding is intended to support the company’s extensive expansion in central Karachi.

With this new partnership, Kickstart plans to double its space in Karachi to over 80,000 sq ft. Established in 2016 by LUMS alumni Saad Riaz, Khawaja Raza, and Hassan Shahid, Kickstart has been a leader in collaborative workspaces in Pakistan, managing 12 locations across the country and serving over 3,000 members. After expansion, its total coverage will increase to 200,000+ sq ft. across 14 locations.

In addition to the investment, Kickstart has introduced a new business model where it will act as the property manager for landlords and operate on a revenue-sharing basis with them. This approach aims to help property owners improve their rental yields.

Traditionally, commercial real estate rental yields in Pakistan have been around 5%, taking 20 years for owners to recover their investment. With Kickstart’s revenue-sharing model, yields can potentially increase to 8-9%, reducing the payback period by 40% with additional investments in furnished assets, as explained by Khwaja Raza.

Kickstart’s flexible workspace arrangements enable modern companies to manage large teams efficiently by quickly scaling up without significant capital expenditures. This is particularly beneficial in downtown Karachi, where quality office space is limited.

The expanded co-working spaces cater to diverse communities, providing private offices for growing ventures, open seating for freelancers, meeting rooms, recording studios, skill-building workshops, and cultural event venues.

The expansion aligns with the global trend of growth in coworking spaces. In India, coworking spaces have seen substantial growth, reaching 680,000 seats and 43.4 million sq. ft by June 2022, projected to rise to 1,025,000 seats occupying 75 million sq. ft by 2025. Similarly, in North America, the coworking market size reached ~$4.6B in 2023, projected to reach $7.73B by 2028, growing at 11% annually.

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