The pandemic has changed our lives and this post explores the effect of the pandemic on cities in general and Bangalore in particular.
Impact of WFH on productivity
The Covid-19 pandemic has forced numerous business establishments to shut down their offices and request their employees to work from home. Anecdotal evidence indicates that most companies especially in the service sector and in back office functions are adapting well to this change without any major adverse impact on productivity.
Impact On Commercial Real Estate
Many companies are also having a hard look at their office space requirements with some even planning to do away with offices entirely. As more and more companies go down this path we will see increasing pressure on commercial spaces which will see much lower utilisation. At an extreme case some of these office spaces may just have to shut shop due to lower occupancy.
Impact on residential real estate
Apart from commercial real estate, residential real estate will also be at threat. If employees don’t need to go to work then theoretically they need not work out of the cities where their previous offices were based in. Instead they could return back to their hometowns and choose to work from there provided they have adequate infrastructure to work from home. This in turn implies rental yields could be under pressure and demand for own housing can also be at risk. Please note this will play out only if companies move to a 100% model. However if companies even insist on one or two days work from office then this thesis will break down.
Impact on Ride Providers
Outside of real estate, the next big sector that will be impacted will be vehicle hailing apps like Uber, Ola, Bounce to name a few. Even a one day work from home will mean a substantial drop of volumes which will impact the ability to scale.
Impact on restaurants / food delivery
Restaurants in erstwhile office areas will also be impacted as customers who used to frequent daily will now only visit them when they need to come to office. Instead delivery apps may be more in favour especially in double income households where both partners will not have time to cook during working days.
Impact on State Finances and Infrastructure
The fall in real estate prices will hit city and state finances and will impact the ability of the city authorities to invest in infrastructure. However on the positive side expenditure will also come down as the city shrinks and uses less of public transport and commute infrastructure.
Shift from offline to online and its impact on real estate
Customers will also increasingly prefer online channels over offline channels and hence we could see downward pressure of physical retailers which in turn will impact commercial real estate.
Impact on pollution and water resources
One positive impact will be the fact that pollution levels will go down as most Bangaloreans will travel less frequently to work. Considering that water consumption and electricity consumptions is lower, the city will also turn more environment friendly. Since water consumption is lower we may less frequent complaints of lack of water access.
Impact on family bonding
On the personal front employees will enjoy the time saved on daily commute and utilise it to either improve productivity or utilise it to spends more quality time with their loved ones.
Conclusion
In summary the pandemic has made us relook our ability to work permanently from home and therefore could impact some areas such as real estate and services that revolve around commercial real estate. The longer the pandemic stays the higher are the chances of disrupting our pre Covid routines.
