The COVID-19 pandemic has compelled further debate about long-term work-from-home (WFH) models and their impact on commercial real estate. The appetite for commercial property could significantly decline as more employees work remotely, says GlobalData’s MEED.
In the Middle East and North Africa (MENA) region, outdoor movement was banned for much of the second quarter of 2020, with exceptions made only for essential sectors. This has forced a review of in-office work patterns.
Neha Bhatia, Construction & Infrastructure Editor at GlobalData’s MEED, comments: “Technology companies such as Facebook, Twitter, Google and Microsoft have been quick to adopt WFH systems to preempt future workplace trends. On the other hand, traditional industries such as construction, utilities and oil and gas have adapted in different ways. Qualified as essential industries in most MENA markets, their onsite and critical in-office work has continued despite lockdowns, but with precautions in place.”
The majority of administrative offsite employees in these companies, including designers, draftsmen, tendering and procurement professionals, however, have largely worked remotely since March. Employees are due to start returning to work in most MENA economies this month. Still, as concerns persist about the biosecurity risks posed by COVID-19, it is likely that more employees in non-essential sectors will want to continue working remotely for some months to come.
Bhatia continues: “The WFH model is also improving work-life balance for low- and medium-income employees that often live in affordable homes typically located farther away from premium-priced commercial zones.”
The case for remote working is strengthened by the lowered operational cost to the employer, which may choose to downsize office space and save rental or maintenance expenses. A part of these savings could then be used to reimburse employees for costs incurred while working from home, as Google has recently announced.
Bhatia adds: “Demand for commercial real estate could note significant depression in the post-coronavirus economy if more employers are compelled by their staff to offer remote working options.
“In the short term, a mixed and flexible model comprising both remote and in-office work shifts is likely to emerge in the MENA region. However, regional asset owners must brace themselves for the medium- to long-term shift in demand for office space spurred by COVID-19.”
About MEED
Launched in 1957, MEED is the world’s leading source of exclusive Middle East business intelligence.
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