Why the next 3 years are crucial for the office property sector

The next 3 years will be an inflection point for real estate as businesses rethink the purpose of their portfolio

Over half of APAC firms say remote working is likely to be available to all by 2025

Companies will look across their real estate portfolios to rethink their office spaces, invest in new technology and prioritise sustainability, as hybrid work becomes more entrenched in corporate culture, according to new research from real estate consultant JLL.

The Future of Work report reveals the trend towards dynamic working continues, with 56% of organisations in Asia Pacific saying that they will likely make remote working available to all employees by 2025 and corporate real estate (CRE) executives saying that successfully operating hybrid work will be the most important strategic priority over the next three years. This includes exploring flexible space options, with the average proportion of flexible spaces in Asia Pacific expected to grow between now and 2025.

“The next three years will prove to be an inflection point for real estate as businesses plot their future path and rethink the purpose of their portfolio,” said Jordi Martin, CEO, JLL Work Dynamics, Asia Pacific. “The changes accelerated by the pandemic represent an opportunity to pause, think about a long-term real estate strategy and how it aligns with future business priorities.”

According to JLL’s research, the shift to hybrid work has become a marker of change in the workplace, placing greater emphasis on how companies

Jordi Martin

James Taylor

HOW THE 0+3 ARRANGEMENT WILL AFFECT HK’S INDUSTRIES

The new 0+3 quarantine arrangement that scraps the compulsory hotel quarantine for inbound travellers from Taiwan and other overseas places is expected to leave a positive impact on several industries in Hong Kong, including the real estate market.

According to JLL, the new setup will positively impact the leasing market.

“An open border will facilitate companies to resume/proceed with their deal diligence processes regarding real estate requirements. We believe many such activities have been put on hold awaiting a clearer roadmap to re-opening,” the real estate expert said.

Since entry requirements got eased, JLL said Hong Kong will be able to regain its attractiveness to multinational companies and mainland firms to set up or expand its presence in the city.

“A pick-up in office leasing activities will lend support to the rental market,” said JLL.

Apart from the office market, JLL said the retail market will also benefit from the easing of quarantine, albeit “minimally initially.”

Jeffries echoed this, saying that whilst the relaxation is a “piece of positive news” for the market, it is unlikely to help retail sales in the short term given the shift in mainland Chinese consumer behaviour.

“Short term, brands and retailers expect domestic spending to be affected by the policy with local people travelling or local consumers save for travelling,” Jeffries said.

Meanwhile, the aviation sector also welcomed the relaxation, with Cathay Pacific saying the latest measure will help boost sentiment for travel.

According to the airline, the adjustment will facilitate “gradual resumption of travel activities and strengthening of network connectivity to, from and through the Hong Kong aviation hub.” can support employee mental wellbeing and maintain productivity. Additionally, the findings showed that 80% of organisations in Asia Pacific agree that quality space is a top priority as high-quality spaces are best suited to facilitate the kind of workplaces, health and wellbeing amenities, and sustainability credentials employees and corporates increasingly need.

The focus for companies will be on investments in quality spaces to ensure the long-term success of hybrid work.

“As the office continues to evolve post-pandemic into a destination for collaboration, occupiers will need to continue increasing their investments in creative spaces,” said James Taylor, Head of Work Dynamics Research, Asia Pacific. “Real estate portfolio strategies to enhance social interaction among a geographically dispersed workforce will be more important than ever, and the focus is on organisations to create offices with less me-space and more we-space.”

Environmental and social aspirations will shape portfolio transformation

With buildings accounting for over 60% of carbon emissions in cities, organisations face ever increasing pressure to deliver clear outcomes in the race to net zero and create social value through real estate. That means sustainability strategies have a direct impact on real estate decisions, with 71% saying they are likely to pay a premium for green building credentials in the future.

Domestic spending expected to be affected by the policy