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The global spread of the coronavirus, coupled with social distancing measures, has forced many business and office employees to resort to working from home to keep operations running.
This trend is likely to continue in the future even after the pandemic is eliminated, posing potential threats to the real estate industry as offices become accessible in the dining room or home workstation.
According to venture capitalist and former FNB chief Michael Jordaan, operations are unlikely to be the same again after closing and working from home will become the norm for many companies.
“Managers have seen that they can actually manage employee output without controlling office attendance. Employees have found ways to be even more productive at home than at work and not waste time in traffic,” He said.
This is not as promising for the property industry as “companies now see that they don’t need all the expensive office space,” added Jordaan.
Keillen Ndlovu, head of listed property funds at Stanlib, echoed the same sentiment.
“If working from home becomes a success (early signs may indicate this), this may have a negative impact on the demand for office space in the future.
“As leases expire, we are likely to see tenants require less office space due to office consolidation (recent examples include Discovery, Sasol, PWC, Deloitte) as well as hot desks and capacity of working from home, “said Ndlovu. Hot-desking is a system that assigns desks to employees as needed, or on a rotating basis.
But the horse may have already run away. According to Gartner Inc., a global research body, a survey of 317 CFOs and financial leaders revealed that 74% of top leaders intend to permanently move about 5% of their staff on-site to positions remote after the pandemic. This comes after leaders identified opportunities to work from within domestic structures, including cost-cutting measures.
Internet access
Although more South Africans are using the Internet, Stats SA noted that 67.7% of South Africans used the Internet in some way in 2019, compared to 63.8% in 2018, only a small number have reliable Internet access from home.
People with limited or no Internet access outside of the office are at risk of being left behind.
“The reality is that Internet access is crucial. People in the world who do not have Internet access are clearly at a disadvantage. That is why the long-awaited release and auction of spectrum is so crucial for South Africa,” said Jordaan, who is also an investor in Rain, a low-cost national network for mobile data.
Mobile operators have blamed the lack of spectrum for relatively high data prices in South Africa compared to other emerging markets. The last time the government granted additional spectrum to Vodacom and MTN was in 2005 for the launch of 3G.
While the government has promised to auction the high-demand spectrum by the end of 2020, the SA Chamber of Commerce and Industry has urged President Cyril Ramaphosa to bring the auction forward by the end of June 2020.
The affordability of data by some mobile service providers is likely to provide some light at the end of the tunnel for those who cannot afford the internet.
“Employers only need to allow their employees to demonstrate that they can contribute without being in a specific location,” Jordaan said.
