COVID-19 is expected to influence the medium-term real estate strategy of several global office space occupiers. Around 67 percent of Indian respondents opined that the pandemic would influence the next three years in terms of real estate strategy. And 71 percent expect to see an increase in their real estate portfolio in the next three years, a report by Knight Frank has said.
Almost 3/4th of the Indian respondents cited that real estate cost-reduction targets have increased since the onset of the pandemic, it said.
The second edition of Knight Frank’s (Y)OUR SPACE report drew on responses from almost 400 international businesses, with a combined headcount in excess of 10 million, providing an insight into the workplace strategies and real estate needs of global companies.
“The sentiment among office occupiers is strong as a majority of them expect their portfolio to increase in the coming years. While the ongoing pandemic has cast a shadow of doubt and uncertainty, the rollout of vaccine programmes globally has brought hope for the future of the real estate sector,” said Shishir Baijal, Chairman & MD, Knight Frank India.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
“There is a clear rise in demand for sustainable real estate plans as firms have set net-zero emission target dates. Moving forward, there will be an expected rise in the healthcare programmes being offered by firms to their workforce that aims at overall wellbeing… and promotes the office as a sanctuary… (In addition, there will be a) rise in demand for ecological and sustainable offices that contribute to a firm target to net-zero emissions,” he said.
International businesses are looking to their workplaces to revitalise their corporate brand and culture after the pandemic, which will see significantly improved amenities and services available for employees, according to the latest research from Knight Frank.
Despite over a year of restricted access to offices, businesses continue to identify workplaces as an essential component of their corporate identity and as a vital part of retaining and reinvigorating employees post-pandemic.
Ninety percent of global occupiers surveyed by Knight Frank said that real estate is a strategic device for their business. Forty-nine percent of firms named ‘corporate brand and image’ as the top strategic priority fulfilled by their real estate, while offices are also increasingly seen as a tool to improve employee wellbeing, collaboration, and talent attraction and retention, with each of these categories referenced by 37 percent of firms.
Among Indian companies, ‘corporate brand and image’ remained a prime strategic objective best supported by a real estate asset. Though ‘talent attraction & retention’ was a close second to the corporate brand and image, what is peculiar is the citation of ‘operational transformation and restructuring’ as the third most-preferred strategic category.
Providing a global context, William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency at Knight Frank, said: “There is a mood of change in the air. Global firms are looking beyond the pandemic and are focused on how their workplaces can enhance corporate culture and re-engage employees in a new age of agile working.”
“We are seeing a re-familiarisation with the office beginning in many big cities around the world. Firms want to give employees the best of both worlds, allowing them to work flexibly, but making their offices the best possible experience, which means delivering higher quality and more engaging workplaces,” he said.
Globally, 77 percent of the survey respondents who have a publicly stated net zero carbon target, have a target date set before 2030. Echoing similar thoughts, 50 percent of the Indian respondents stated net zero carbon emissions target, with the majority citing the year 2030 as the target year.
Around 96 percent of the respondents believed that their organisations’ commitment to becoming net-zero carbon organisation would change real estate choices. Around 78 percent stated that sustainability considerations would be a key influence in determining real estate strategy and portfolio over the next three years, the research said.
The research also found that Indian occupiers’ biggest frustrations with their landlords are a lack of flexibility (38 percent) and a lack of innovation in product or service offering (25 percent), highlighting the need for landlords to invest in operations, property management and tenant services.
Encouragingly, 42 percent of Indian respondents and 60 percent globally said they had seen an increase or significant increase in communication with their landlord over the course of the pandemic, providing an opportunity for landlords and tenants to develop a more collaborative and partnership-orientated relationship for the long-term.
More rigorous cleaning regimes in the building, use of contactless entry systems, and temperature-scanning of building occupants were described as the top three expectations from the landlord to make the workplace safer, the report said.