A rebound in South Africa’ property market and a massive push towards working from home has created the risk of a ‘hype cycle’, says John Loos, property strategist at FNB Commercial Property Finance.
Loos said that a ‘hype cycle’ refers to cycles of over-expectation followed by disillusionment when a certain technology shows great promise.
“While the forced lockdown-related Work From Home (WFH) ‘experiment’ of 2020 was not technology-driven but rather pandemic-driven, the available technology that enabled the success of WFH was a big part of its success and resulting hype,” he said.
“This led to a huge amount of hype around the future of WFH and in many instances, perhaps an over-expectation of how quickly many more people would work from home and how rapidly office space would become obsolete.”
Loos believes that the WFH hype was likely overdone, and not because it does not have a big future, but rather because some had expected too much from WFH too quickly.
As a result, we are now likely to see some disillusionment to follow as many workers return to the office slowly but surely, he said.
Loos believes that neither the extreme hype nor the disillusionment that follows will necessarily be in line with reality. “The reality is that many jobs cannot be WFH jobs and certain parts of jobs require face-to-face interaction,” he said.
“Our view since lockdown began was that the long-term trend towards greater WFH, in play for decades already as enabling technology develops, has received a boost by forcing late adopters to try WFH out.
“But first, the level of WFH needs to drop as and when economic life normalises and then begin to resume the longer-term rising trend at what I believe will be a faster rate than the pre-lockdown rate.”
What is misunderstood about WFH is that the rising trend does not only mean a greater portion of the workforce working from home full time but also the office-based population spending a greater portion of their time working remotely, Loos said.
This enables office space-saving by companies through a move away from reserved desk space to ‘hot desking’ and ‘hotelling’.
On top of WFH, the Finance, Real Estate and Business Services (FREBS) sector shed some 7.5% of its employment in 2020. With this sector’s employment a key driver of office space demand, this alone may result in office space cutbacks by companies, he said.