Fully remote work is all but dead - so what's next?

Over the next two years, Oxford Economics anticipates a 0.3% decline in total returns for offices - significantly below hotel, the top performing sector with growth of 1.8%.

The outlook for the office sector is being weighed down by the ongoing, significant impacts from the work-from-home movement and the drive toward energy efficiency.

As the workplace stabilises post the Covid era, the golden age of WORK-FROM-HOME (WFH) isn’t just coming to a close. Fully remote work is all but dead, too, according to a new EY survey.

Only 1% of over 500 business leaders surveyed by EY said that their companies are fully remote, according to its third annual Future of Work Index.

And anecdotally, in South Africa and in many economic hubs, businesses have ordered their employees to come back to the office.

This is likely to stabilise the office space as the industry repurposes how the office should look going forward in a more 'hybrid' oriented scenario.

Additional data from Oxford Economics, meanwhile, notes that continued economic growth will help stabilise commercial real estate yields and values before pricing slowly begins to recover next year.

"We expect global all-property total returns to average 5.3% per year over 2024-2025 in our baseline scenario," it said.

However, there are still upside and downside risks that real estate professionals should watch out for.

The most significant risk to property returns remains a scenario in which higher interest rates trigger sharp falls in stock markets and house prices, significantly tighter credit conditions, and several years of subpar growth.

Escalation in Israel-Hamas war remains to be a downside risk. Over the next two years, the Asia-Pacific region would record the most severe drop in values, followed by the US. Office would likely record the largest drop on average.

Geopolitical tensions are front and centre in our increased China-Taiwan tensions scenario. "We assume a decoupling of trade and technology starting in Q3 2024 through an increase in trade barriers against China and a shutdown of the transfer of knowledge," it said.