The agency said this could result in vacancy levels rising more than 500 basis points in fiscal years 21-23. “The impact on future office space providers is likely to be particularly large, as they might find it difficult to rent their properties in the future. “
Almost 83 percent of employees surveyed by Accenture recently preferred a hybrid work model with the ability to work remotely 25 to 75 percent of the time.
Ind-Ra said such a shift to remote working can seriously hamper demand for office real estate, as it may allow businesses to use a hot desk policy where the same office can be shared by a certain number. number of employees who report to work on different days.
If 2.5 percent of all employees are asked to show up for work alternate days and use the hot desk policy, this can result in a net reduction of 1.25 percent in office space. required in a country.
Based on 635 million square feet of office space occupied in India’s eight major cities at FYE20, Ind-Ra said, this will result in negative demand of 7.9 million square feet, or 21 percent. of the average annual demand observed during FY19 to FY20.
“A greater impact of hot desking could reduce demand for several years in the short term and create significant difficulties for office property providers.”
In addition, a number of international companies have announced hybrid work models where employees will only need to show up to the office a few days of the week. Ind-ra said that it can be easy to infer that the space that can be submitted to the shared desktop model may be well over 2.5% as expected.
Ind-Ra said the occupancy rate at a large office portfolio-focused real estate investment trust (REIT) declined to 86.8% in 4Q FY21 from 92.2% in 1Q FY21.
The occupancy rate in another listed REIT declined to 81.8% in 4Q FY21 from 87.1% in 2Q FY21. The occupancy rate of other REITs and listed companies has also declined by around 500 basis points over the past four quarters, Ind-Ra said.