Work from home culture may damage workspace market: Ind-Ra
Real Estate

Work from home culture may damage workspace market: Ind-Ra

Unfavourable demand created by the work-from-home culture along with the reduction in recent leasing activities as a result of a weaker economy can easily hit 40% off annual demand for the next few years, as per India Ratings and Research (Ind-Ra).

The agency told the media that this negative demand can lead to over 500 basis points increasing the vacancy levels over FY21 to FY23. While the impact on upcoming workplace providers is likely to be particularly sharp as these may struggle to let out their upcoming properties.

Almost 83% of employees surveyed recently by Accenture favoured a hybrid work model with the flexibility to work remotely 25% to 75% of the time.

Ind-Ra stated such a transition to working remotely can severely hamper office real estate demand as it may allow companies to use a hot-desking policy.

If 2.5% of total staff are asked to report to work on alternate days and use the hot-desking policy, it may result in a net 1.25% reduction in office space required in a country.

Ind-Ra said that on a base of 635 million sq ft of office space occupied in the top eight cities of India at FYE20, it will result in a negative demand of 7.9 million sq ft which is 21% of the average annual demand seen during FY19 to FY20.

Moreover, several international companies have announced hybrid work models where the employees will need to report to the office only on a few days of the week.

Ind-Ra said that occupancy at a large real estate investment trust (REIT) focusing on office portfolio has dipped to 86.8% in 4Q FY21 from 92.2% in 1Q FY21.

Further, the agency added that occupancy at another listed REIT has decreased to 81.8% in 4Q FY21 from 87.1% in 2Q FY21.

Image Source


Also read: 7,400 office leases of 90 million sq ft up for renewal in top 6 cities in 2021

Also read: Embassy REIT to invest Rs 2,800 cr in developing office spaces

Unfavourable demand created by the work-from-home culture along with the reduction in recent leasing activities as a result of a weaker economy can easily hit 40% off annual demand for the next few years, as per India Ratings and Research (Ind-Ra). The agency told the media that this negative demand can lead to over 500 basis points increasing the vacancy levels over FY21 to FY23. While the impact on upcoming workplace providers is likely to be particularly sharp as these may struggle to let out their upcoming properties. Almost 83% of employees surveyed recently by Accenture favoured a hybrid work model with the flexibility to work remotely 25% to 75% of the time. Ind-Ra stated such a transition to working remotely can severely hamper office real estate demand as it may allow companies to use a hot-desking policy. If 2.5% of total staff are asked to report to work on alternate days and use the hot-desking policy, it may result in a net 1.25% reduction in office space required in a country. Ind-Ra said that on a base of 635 million sq ft of office space occupied in the top eight cities of India at FYE20, it will result in a negative demand of 7.9 million sq ft which is 21% of the average annual demand seen during FY19 to FY20. Moreover, several international companies have announced hybrid work models where the employees will need to report to the office only on a few days of the week. Ind-Ra said that occupancy at a large real estate investment trust (REIT) focusing on office portfolio has dipped to 86.8% in 4Q FY21 from 92.2% in 1Q FY21. Further, the agency added that occupancy at another listed REIT has decreased to 81.8% in 4Q FY21 from 87.1% in 2Q FY21. Image Source Also read: 7,400 office leases of 90 million sq ft up for renewal in top 6 cities in 2021 Also read: Embassy REIT to invest Rs 2,800 cr in developing office spaces

Next Story
Infrastructure Urban

3i Infotech Reports Rs 7.25 Bn Revenue for FY25

3i Infotech, a leading provider of digital transformation, technology services and technology solutions, announced its consolidated financial results for the fourth quarter and full year FY25, ended on March 31st, 2025. The company maintained its growth momentum, displaying consistent progress for the 3rd consecutive quarter.In Q4 FY25, 3i Infotech reported revenue of Rs 1.87 billion, reflecting steady performance compared to Rs 1.81 billion in Q3 FY25 and Rs 1.97 billion in Q4 FY24. The company delivered strong profitability improvements, with gross margin growing by 14.8 per cent Q-o-Q and 1..

Next Story
Infrastructure Urban

Emerald Finance Joins Baya PTE to Boost SME Bill Discounting

Emerald Finance is a dynamic company offering a spectrum of financial products and services including its flagship Earned Wage Access (EWA) in India, has entered into a strategic partnership with Singapore-based Baya PTE through its Indian subsidiary. This collaboration aims to strengthen bill discounting services for Small and Medium Enterprises (SMEs), enabling faster access to working capital and improved cash flow management.The initiative is designed to support SMEs that supply to large corporates such as JSW Steel, Delhivery, and PVR INOX, among others. By facilitating timely invoice dis..

Next Story
Infrastructure Urban

BLS E-Services Crosses Rs 5 Bn Revenue Mark in FY25

BLS E-Services, a technology-enabled digital service provider, announced its audited consolidated financial results for the quarter and full year period ended 31 March 2025.Speaking about the performance and recent updates, Shikhar Aggarwal, Chairman, BLS E- Services said, “We are delighted to report a remarkable performance in FY25, as we achieved several milestones during the fiscal year. FY25 marked our highest-ever financial performance, as we surpassed Rs 5 billion milestone in Total Income during the year, which was reported at Rs 5.45 billion, a notable YoY growth of 76 per cent. The ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?