PERSPECTIVE3-5 min to read

The three Cs driving WFH and their impact on global cities

Investors in the office sector face a divergent picture due to the working from home (WFH) trend.



Tom Walker
Co-Head of Global Listed Real Assets

The pandemic’s effect on our working lives has been profound. It has certainly dispelled any myths around “shirking from home” with many companies finding that their employees can be just as, if not more, productive at home as in the office. The key question to answer is how damaging Covid-19 will be to long-term office demand.

We think there are three primary forces working together and leading to market change: commuting, culture and Covid-19. Importantly, these three forces will play out differently in different global cities, making a nuanced picture for investors.


Firstly, different countries have handled the pandemic with varying degrees of success so far.

Cities that have contained the pandemic have seen less disruption to normal working patterns and therefore a more muted work from home (WFH) trend. By contrast, when the authorities’ handling of the pandemic has been less successful, the working from home trend has been more pronounced.

It is also worth noting that some cities have a large amount of high rise buildings. Moving large numbers of people around a skyscraper is almost impossible when you have to adhere to social distancing.


The popularity of working from home isn’t purely down to the spread of the virus. Commuting is also a crucial factor, in our view.

Employees may be reluctant to return to offices due to the virus, but many also value the time and money freed up by the lack of commute.

However, in more densely populated locations such as Singapore or Hong Kong, virtually everyone lives in a flat. Not only does this often mean people live in closer proximity to the office, but lack of space makes working from home less practical. Excellent public transport also means shorter commutes.

Meanwhile, other cities are more accessible by car, enabling commuters to avoid the risk of infection on public transport.


Our third force is culture. For cities such as London, the pandemic didn’t start the working from home trend; it accelerated a shift that was already happening. Modern office developments are no longer let on the basis of one desk for one employee; shared workspaces help employers save costs and employees embrace flexible working practices. Expensive, time-consuming commutes and a desire for better work-life balance were already seeing many office workers choose to work from home for a day or two per week.

By contrast, a culture of needing to be present in the office still prevails in many places; Japan is often singled out here.

We would also point to culture beyond the office too. The current pandemic has been described as “unprecedented” in many quarters but for many Asian cities, it isn’t. Similar virus outbreaks have occurred in the recent past, notably SARS in 2003.

It’s partly because of these outbreaks, as well as seasonal colds and flu, that people in many Asian cities are already accustomed to measures like wearing a face mask. In cities such as Tokyo or Hong Kong, wearing a mask not perceived as an inconvenience or a reason not to go about your business as usual.  

In addition, even as recently as 2003, the technology simply wasn’t advanced enough for people to work from home. Broadband speeds have increased to a sufficiently high speed to enable a trend that was previously impossible.

Select your office exposure carefully

These three themes – Covid-19, commuting and culture - all intersect and are creating the varied picture we see in terms of the return to the office globally. For some cities, home-working was on the rise anyway and is likely to lead to reduced office demand. However, we think employers will always want to retain an office presence, even if not every employee is working there every day. 

A recent report by Barclays found that office-based employers expect work-from-home days to rise on average to two per week, from 0.9 pre-pandemic. Offices may end up being smaller if fewer people are working in them each day. But we think this will emphasise their importance as a hub, where employees can meet and exchange ideas.

From an employer’s perspective, the collaboration and idea generation that happens when people are together in the office is crucial. Workers also need to make connections with new colleagues and train junior staff. These things are not impossible when working virtually but they are easier face to face. Even maintaining existing work relationships becomes harder if communication is solely via email or Zoom for a prolonged period.

Those cities that are most impacted are likely to have longer commute times and a high cost of living; London and New York are prime examples. In contrast, smaller living areas and shorter commute times will reduce the adoption of working from home; the likes of Hong Kong and Singapore neatly fit this description.

The reality for many is that a new hybrid working life will now be normal. The winds of change were already pushing real estate markets in this direction - Covid-19 has just accelerated the inevitable.

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Tom Walker
Co-Head of Global Listed Real Assets


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