Approx. 80% of occupiers in India prioritize physical offices, expressing the

Approx. 80% of occupiers in India prioritize physical offices, expressing the desire to bring employees back to the office – CBRE’s India Future of Office Survey 2021

88% of survey respondents believe business conditions are currently improving in India

 

CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its ‘India Future of Office Survey 2021’- conducted between September and November this year. CBRE reached out to close to 100 occupiers, with a combined employee base of over 100,000 in India. This included both global and domestic corporates from key sectors including technology, BFSI, engineering & manufacturing, infrastructure, real estate & logistics, research, consulting & analytics, and pharmaceuticals/healthcare.

The survey observed that with the importance of physical offices intact, the need for workplace flexibility and safety would drive new behaviors across occupiers, developers, and investors. Senior business leaders have expressed a strong desire to bring employees back to the office with about 80% of them prioritizing physical offices; but several of them are also willing to offer a greater degree of flexibility and choice. The survey highlighted that about 58% of respondents in India plan to implement policies allowing office-based working with the option of working from home.

 

Post the second wave, occupiers are striving to encourage employees to come back to offices with their safety and well-being at the forefront of their ‘return to work’ plans. The survey highlighted three areas that require tech enhancement to facilitate return to work - admin, FM services and amenities, along with space tracking.

 

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE said, “In CBRE’s view, despite an increased adoption of hybrid working during the pandemic, a wider adoption in the long-run seems unlikely. Even with the adoption of hybrid work, most companies expect employees to work in the office most of the time. This new shift in working patterns should be considered amidst occupiers’ intent to expand portfolios in India over the next two years.

 

We thus believe the adoption of hybrid working practices would have only a limited downside impact on future office demand in the medium to long term, particularly as space planning is undertaken based on long-term peak occupancy rates.”

 

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India said, “The current pandemic is accelerating changes in performance, expectations and role of the workplace. Successful and targeted strategies can envision a practically implementable ‘Future of Work Concept’, effectively leveraging potential changes in work styles and corresponding opportunities to rebalance the workplace.

 

Majority of the respondents were clear on the importance of the physical office across our India, APAC, and larger global markets. While the relevance of physical space is here to stay, the focus of business must be on the evolving purpose of office spaces.”

 

It is clear that despite so much focus on hybrid work during the pandemic, future real estate strategies would not favor a fully remote or in-office workforce. Rather, strategies are expected to support choices, end-user experiences and actions that allow employees to integrate life and work.

 

“The nature of the workplace has completely evolved over the past two years. The adoption of hybrid work is likely to require companies to enhance their workplace strategies to deliver seamless and engaging experiences. The successful adoption of hybrid work within a company would require defining where work can be accomplished, what work requires in-person collaboration to accomplish and who benefits most from spending time in the office.”, added Ram Chandnani.

 

Another key CRE area identified by the survey is the growing importance of Environmental, Social and Governance (ESG). Nearly 60% of respondents to CBRE’s 2021 Global Investor Intentions Survey Report stated they have already adopted ESG criteria as part of their investment strategies.

 

Key Future Office Trends

Hybrid working:

• Business leaders have a strong desire to bring employees back to the office but at the same time are willing to offer a greater degree of flexibility and choice.
• Several organizations are currently conducting pilot studies into the feasibility of hybrid working before they commit to large-scale implementation.
• Most companies would offer frequent or infrequent hybrid working options to mainly 25% of the workforce in India in the long run.
• CBRE cites that clear guidelines should govern hybrid work eligibility and approvals. Going forward, this governance would be more stringent in India as compared to other APAC regions.

Portfolio growth and agility:

• Physical office is still a requirement for most employees. Hence, most occupiers intend to expand portfolios over the next two years.
• New ‘core+flex’ strategies are emerging amidst portfolio expansion and hybrid working.
• Increased use of flexible spaces and consolidation are top short-term portfolio strategies.
• As the flexible space industry continues to evolve to meet occupier requirements, a broader offering, ranging from on-demand meeting space to customized private suites, is becoming available.

Workplace strategies:

• Workplace strategies are being fundamentally reset to allow for a more hybrid workforce by adding collaborative and tech-enhanced spaces.

• About half of the respondents would increase their staff-to-desk-sharing ratios in the next two years.
• Targeted mobility and activity-based working would be top seating preferences.
• The financial obligations, compliance, employee engagement and liability considerations of a hybrid work program must be weighed.

The future role of the office

• The advent of hybrid working would change the future role of the office as a center for employee collaboration.
• The future role of the office is evolving to ensure the safety, wellness, productivity and engagement of a more distributed workforce.
• The workplace would be more effective for employee engagement, collaboration and team productivity.
• Health & wellness and safety continue to be key priorities for occupiers in India as a majority of the respondents would be implementing more touchless technologies as well as HVAC solutions.

Expecting early recovery, 50% Shared Accommodation operators are

Expecting early recovery, 50% Shared Accommodation operators are looking forward to spending on fit-outs; 89 % seek govt. support to get recognised as a separate asset class: CBRE- SAPFI Survey

Student Accommodation Providers Association of India (SAPFI) and CBRE South Asia Pvt. Ltd., India’s leading real estate consulting firm- today shared the findings of its survey on Shared Accommodation – one of the fastest growing segments of the real estate sector in the country. According to the survey titled “RE-STARTING THE ENGINE - WAYFORWARD FOR THE SHARED ACCOMMODATION SEGMENT”, almost 50% of the operators are willing to spend on fit-outs and 63 % operators are expecting a major shift towards professionally managed facilities.

The findings further highlighted that the product mix and offerings by operators will witness a shift towards single and double occupancy rooms given the need and consumer preference for social distancing. A higher value will be attached to cleanliness and hygiene standards of these new asset classes or professionally managed student accommodation and co-living facilities. Additionally, over 50% operators responded that they will be looking at expanding the bed capacity in their facilities and provide for the required safety measures to ensure health and safety of occupants.

The Survey was jointly conducted by SAPFI and CBRE during the month of June and July 2020 and included operators from the Professionally Managed Student Accommodation (PMSA) and co-living segments.

Commenting on the survey findings, Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE said “Professionally managed shared accommodations are considered to be globally established asset classes in the real estate industry and developers are increasingly viewing co-living/student housing as a natural extension of their businesses. The Covid-19 global pandemic has clearly brought forward the need for quality student accommodation facilities across the country. Besides, going forward health and wellness will be the major focus among developers, and they will be putting a lot of emphasis on integrated developments as well.”

Kaushal Mahan, Convener, SAPFI commented “The Covid-19 pandemic has severely impacted the booming shared accommodation industry including student housing and co-living. But with the changing consumer preference, the industry will soon be turning the present crisis into an opportunity and contributing to the government vision on “Getting Growth Back”. To ensure this growth, we will closely be continuing to work with the Center and State Governments for further bringing favourable policy and regulatory ecosystem for our members”.

On the survey findings, Rami Kaushal, Managing Director, Consulting & Valuation Services, CBRE, said “India has seen remarkable progress in the education sector and student enrolment from across the world. The safety of tenants has always been the top-most priority for operators. The industry is also relooking at the design aspects of upcoming properties in order to suit the needs for safety and to ensure that social distancing norms are being met. Moving ahead, revenue sharing model is expected to become the preferred business model as it helps mitigate the risk between operators and developer/landowners.”

Future Outlook:

• Operators are re-looking at the design aspects of their upcoming properties. Most of the operators feel the need to increase the room sizes to suit the safety requirements.
• Increased focus from colleges to assess health and hygiene standards of shared accommodation spaces.
• There will be an increased focus on Facility Management services and there might be an increased cost for sanitization procedures and for providing add on services like room service, etc.
• Travel restrictions across countries will provide an opportunity for Indian universities to attract top tier student demand.
• Tie-ups with top Tier Universities for operators to ensure stable occupancy levels and revenues.
• Revenue share with the developer/landowner will be the most preferred operating model.
• Increased preference towards developing purpose-built facilities over converting/modifying existing properties.

Measures taken by the Occupiers during the Covid-19 pandemic:

• Provision of sanitizers at all entrance points.
• Limited/restricted access to common amenities area.
• Staggered timings for utilizing common amenities.
• Allowing only one person per room.
• Deliver food to the individual’s room.
• Encouraging the use of staircases over elevators.
• Restricted visitor entry within the facilities.
• Temperature and symptom check at the entrance point of the building.
• Encouraging students to download the Aarogya Setu app.
• Operators offering relief in monthly rental payments.

Support Required from Government

• 89 percent of survey participants feel the need for classifying co-living/professionally managed student accommodation as a separate asset class by the government
• 53 percent of the respondents highlight lack of clarity on regulatory norms while 37% have mentioned GST tax structure related concerns as main issues which require direction from Government.