Before COVID-19 struck the entire world, working from home seemed like a faraway dream. Now, 55% of businesses worldwide are offering the option to work from home (WFH) due to the pandemic. According to a survey done by The Straits Times, 8 out of 10 workers prefer WFH due to daily commutes and the fear of contracting COVID-19. With WFH being the default arrangement, there will be unavoidable impacts on the real estate market.
Impact on the residential real estate market
Proximity to the workplace was one of the top concerns when it came to getting a new job. However, with the WFH default arrangement, prospective homeowners are now looking at the spaciousness of the flat and cost per square foot ($psf). Additionally, residential property buyers tend to consider those flats which provide an additional room as their home office over those without it. As such, smaller flats will be less popular among buyers for the time being, unless the number of occupants is below 2.
Looking at the rental market in 2020 (picture above), there has been a 0.67% increase of average rental price per square foot, from the start to the end of 2020. This is mainly contributed by Malaysian workers and those who chose to move out of their home due to distractions (noisy neighbours, inadequate space at home, etc.). In the first half of 2021, we can expect the trend to remain consistent due to the WFH arrangement and the extension of Malaysia’s Movement Control Order (MCO) till 4th March 2021.
Impact on the commercial real estate market
Though employees are allowed to return to the offices when it is necessary to do so, the usage rate of offices is on the lower side as compared to pre-COVID period. This gave rise to the idea of rental workspace, whereby a space can be rented from a few hours for brainstorming sessions or for meetings with clients. With the decrease in usage of commercial offices and the increase in workspace rental, the commercial market is expected to take a dip for a period of time. Even if the pandemic situation is better, the WFH arrangement will most likely be here to stay.
Despite that said, with more people working from home, the number of users shopping online has increased from 3 million in 2019 to 3.1 million in 2020. With more people shopping online, third-party logistics (3PL) companies, such as Ninjavan, UrbanFox, and YCH Group, will require more space to store the goods and will look to acquire more if it.
When it comes to the retail industry, which is one of the few that suffered the greatest impact from the virus outbreak, it might become a common sight to see small businesses fold up and the shop fronts will be acquired by larger organisations. Thus, there will most likely be minimal changes in the retail property prices.