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13-05-2020, 18:38   #1
schmittel
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Long term WFH and impact on property

The discussion in the 2020 thread was getting OT for that thread but it is nonetheless a valid topic in the context of the impact it will have on property in generally.

Personally I believe WFH is here to stay in a meaningful way, and Covid has just accelerated what was likely to be a long term trend.

An IBEC survey shows some support for it amongst employees:

Quote:
The majority (83%) of the 7,241 respondents indicated they would like to work remotely after the crisis is over. Of these, 12% want to do so daily, 42% said they would like to do so several times per week and 29% said they want to work remotely several times per month
There are those who argue that it's just a flash in the pan because lots of employees like the human contact, office banter, structure, routine etc.

However this is ignoring a key factor - what do the employers want? It will be the employers who are the long term drivers of the trend and the fact that IBEC have commissioned this survey is interesting in itself.

It is true that is not for everybody - some people need more management than others and are more productive in an office environment.

But the result of that will simply be that employers will place a premium in future on employees who have the necessary skillset to work remotely and reliably.

If this comes to pass it will profoundly impact the market nationally, because less people will be willing to pay the premium for Dublin, particularly those with children.

One hears argument that Dublin will always win out irrespective of job location because of the sheer wealth of amenities it offers compared to the rest of the country.

This is true if all other things are equal, but currently they're not equal in that you have to pay a hell of lot extra for those amenities.

Inevitably that gap will fall, both in rents and purchase prices.

I am not suggesting that hordes of people are going to suddenly leave Dublin in the short term.

Just that a small % of those who are currently renting or thinking of buying Dublin will question if a) they absolutely have to be in Dublin and b) if they don't, is it worth paying the premium?

In the medium term I think it is inevitable that this % will increase until such time that the premium is believed to be worth it and then the gap will level off.

In the long term I think it will lead to a problem of oversupply of family homes in Dublin that will rebase prices nationally.
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13-05-2020, 18:57   #2
schmittel
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Reposting from other thread for info:

For example - if you are a WFH couple with kids are you going to go for this:



3 Bed 1 bath 94 sq m semi d 1960s bungalow in Dun Laoghaire for €475,000

or this:



4 bed 4 bath 223 sq m 2000s detached in Wexford town for €365,000

Sure that kind of choice is unlikely to be widely practical to buyers in 3 months time, but what about in 3 years time? And what about 30 years time (the amount of time you'll be paying for the house.)

The current premium is surely unsustainable long term?
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13-05-2020, 19:05   #3
The Student
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Originally Posted by schmittel View Post
The discussion in the 2020 thread was getting OT for that thread but it is nonetheless a valid topic in the context of the impact it will have on property in generally.

Personally I believe WFH is here to stay in a meaningful way, and Covid has just accelerated what was likely to be a long term trend.

An IBEC survey shows some support for it amongst employees:



There are those who argue that it's just a flash in the pan because lots of employees like the human contact, office banter, structure, routine etc.

However this is ignoring a key factor - what do the employers want? It will be the employers who are the long term drivers of the trend and the fact that IBEC have commissioned this survey is interesting in itself.

It is true that is not for everybody - some people need more management than others and are more productive in an office environment.

But the result of that will simply be that employers will place a premium in future on employees who have the necessary skillset to work remotely and reliably.

If this comes to pass it will profoundly impact the market nationally, because less people will be willing to pay the premium for Dublin, particularly those with children.

One hears argument that Dublin will always win out irrespective of job location because of the sheer wealth of amenities it offers compared to the rest of the country.

This is true if all other things are equal, but currently they're not equal in that you have to pay a hell of lot extra for those amenities.

Inevitably that gap will fall, both in rents and purchase prices.

I am not suggesting that hordes of people are going to suddenly leave Dublin in the short term.

Just that a small % of those who are currently renting or thinking of buying Dublin will question if a) they absolutely have to be in Dublin and b) if they don't, is it worth paying the premium?

In the medium term I think it is inevitable that this % will increase until such time that the premium is believed to be worth it and then the gap will level off.

In the long term I think it will lead to a problem of oversupply of family homes in Dublin that will rebase prices nationally.
one of the main attractions of any city is the amenities it has, be it pubs, schools, hospitals etc. We don't have the population density to spread out throughout the country and still provide enough choice of amenities that people want.

The decentralization was an ideal opportunity to achieve this but it did not happen.

People can still work from home while living in Dublin. The business saves money on office space but still has staff close at hand.

Business will do what suits it I see a gradual move to less office based time but maybe a day or two a week. I can't see us working from home all day everyday.

It will take at least another one or two generations before there are any significant changes but again only if the amenities exist.
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13-05-2020, 19:46   #4
schmittel
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one of the main attractions of any city is the amenities it has, be it pubs, schools, hospitals etc. We don't have the population density to spread out throughout the country and still provide enough choice of amenities that people want.

The decentralization was an ideal opportunity to achieve this but it did not happen.

People can still work from home while living in Dublin. The business saves money on office space but still has staff close at hand.

Business will do what suits it I see a gradual move to less office based time but maybe a day or two a week. I can't see us working from home all day everyday.

It will take at least another one or two generations before there are any significant changes but again only if the amenities exist.
If it hadn't been for Covid I think I'd agree about one or two generations re significant change, but I think that lockdown will accelerate that change.

We've already seen that people who are priced out of Dublin are prepared to move to Wexford and commute to Dublin, surely it follows that those who can WFH would consider it?

The reason I chose Wexford as an example is it already has fairly significant amenities - enough to attract a small amount of people out of Dublin.

The more that move the more these amenities improve. As the amenities improve more are tempted to make the move - and so on and so forth.
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13-05-2020, 19:58   #5
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If it hadn't been for Covid I think I'd agree about one or two generations re significant change, but I think that lockdown will accelerate that change.

We've already seen that people who are priced out of Dublin are prepared to move to Wexford and commute to Dublin, surely it follows that those who can WFH would consider it?

The reason I chose Wexford as an example is it already has fairly significant amenities - enough to attract a small amount of people out of Dublin.

The more that move the more these amenities improve. As the amenities improve more are tempted to make the move - and so on and so forth.
I think people will stay as they are until we get out of the recession we are going through. People will start families and settle where they are, it is the next generation who will be the first to wfh more.

Businesses who are in the middle of leases will be stuck in them so moving to smaller offices because of staff wfh will have no impact on their costs.

It is the chicken and egg, amenities won't appear until there is demand and people won't move unless there are amenities.

Its like going on holiday because its new you think you could live there all the time but eventual the novelty wears off. Living outside Dublin would be the same effect.
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13-05-2020, 20:49   #6
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Originally Posted by schmittel View Post

However this is ignoring a key factor - what do the employers want? It will be the employers who are the long term drivers of the trend and the fact that IBEC have commissioned this survey is interesting in itself.

The employers want their employees in the office. They are being paid in exchange for their time, focus, energies and collaborative abilities with other colleagues.



Employees cannot give those things to the same extent if they've screaming children in the other room or spend all day browsing the internet.



Did you ever ask yourself why most employers block things like Twitter and Facebook in the office? it's because they want the full attention of the people they are paying to be there. They'll never get that if they let them wfh.


We may see a slight movement to 1 or 2 days a week wfh, max. But that's it.
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13-05-2020, 20:53   #7
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Originally Posted by Fred Cryton View Post
The employers want their employees in the office. They are being paid in exchange for their time, focus, energies and collaborative abilities with other colleagues.



Employees cannot give those things to the same extent if they've screaming children in the other room or spend all day browsing the internet.



Did you ever ask yourself why most employers block things like Twitter and Facebook in the office? it's because they want the full attention of the people they are paying to be there. They'll never get that if they let them wfh.


We may see a slight movement to 1 or 2 days a week wfh, max. But that's it.
I don't think we'll see mass changes, but I think you're a bit out of touch with modern working practices.
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13-05-2020, 20:56   #8
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I don't think we'll see mass changes, but I think you're a bit out of touch with modern working practices.

Don't think so. The need for control over their employees will never, ever change. Give an inch and many will take a mile. This is unchanging huiman nature
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13-05-2020, 20:57   #9
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Don't think so. The need for control over their employees will never, ever change. Give an inch and many will take a mile. This is unchanging huiman nature
Yea, you're out of touch.

This isn't how it works in the real world.
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13-05-2020, 21:13   #10
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Many people not from Dublin cannot stand the place, I hear it from them all the time. These are the people from the country who have to work in Dubin but who go home every single weekend. Every single weekend.

These are the cohort (cohort - the covid press conference's favourite word) who will press hard to work remotely in their home place for the likes of the newer tech companies.

This in turn will reduce demand for both rental space and subsequently starter housing stock in Dublin for this...cohort!

An employer who can lease smaller office space based on 40-60% occupancy by their employees will jump at the chance.
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13-05-2020, 21:28   #11
schmittel
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Quote:
Originally Posted by Fred Cryton View Post
The employers want their employees in the office. They are being paid in exchange for their time, focus, energies and collaborative abilities with other colleagues.



Employees cannot give those things to the same extent if they've screaming children in the other room or spend all day browsing the internet.



Did you ever ask yourself why most employers block things like Twitter and Facebook in the office? it's because they want the full attention of the people they are paying to be there. They'll never get that if they let them wfh.


We may see a slight movement to 1 or 2 days a week wfh, max. But that's it.
I'd argue that in many cases the employers want the job done. And that's what their paying for. How much time, focus, energy, optimum collaborative abilities the employee expends on getting the job done is largely irrelevant to the employer once they are satisfied with the results.

One of the consequences of the current situation is employers will start to question the value of spending resources trying to claim 8 hours of time, focus and energy each day.

I am not arguing this is the reality for every company or job or employee, that's clearly nonsense.

But so is saying it is the reality for none.
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13-05-2020, 21:29   #12
schmittel
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Don't think so. The need for control over their employees will never, ever change. Give an inch and many will take a mile. This is unchanging huiman nature
And neither these employers and employees will be suitable for WFH, but it is not everybody.
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13-05-2020, 21:30   #13
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Twitter announced today that going forward anyone who wants to work from home can do so.

In my own case, 100% of my job can be done remotely. I've been doing so since March 13th. Most likely will be until September 1st at the earliest.

If I could continue to do so, i could move closer to family and pay a third of the rent i currently am for somewhere twice the size, if not bigger.
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13-05-2020, 21:37   #14
schmittel
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I think people will stay as they are until we get out of the recession we are going through. People will start families and settle where they are, it is the next generation who will be the first to wfh more.

Businesses who are in the middle of leases will be stuck in them so moving to smaller offices because of staff wfh will have no impact on their costs.

It is the chicken and egg, amenities won't appear until there is demand and people won't move unless there are amenities.

Its like going on holiday because its new you think you could live there all the time but eventual the novelty wears off. Living outside Dublin would be the same effect.
When you say next generation do you mean young single people in 20s living in Dublin now who have yet to start families or kids who are still in school now?

I'm not envisaging a situation where a couple who are settled in Dublin, mortgage underway, have kids or planning them soon suddenly decide to leave town because broadband is getting better down the country!

I see a scenario after the dust settles with this recession whereby the next government offers tax breaks to businesses and employees to encourage WFH. They will talk it up as a way of hitting their climate targets, reducing congestion, etc etc. Winning policy as it will keep business/workers/greens happy.

Meanwhile a young couple who are working and renting in Dublin - their lease is up, given notice and they start looking at their options to replace their apartment in Blackrock.

Faced with €2k a month for 80 sqm in they'll at least look further afield. If they are planning on buying a house or having kids anytime in the short - medium term now might be a good time to weigh up a move etc etc etc

For €1k a month they will get a 3 bed house in Wexford town. Good pubs, restaurants, etc train to Dublin etc. If they can WFH the idea must at least cross their mind.

Of course not just young couples in their 20s that rent. What about the couple in their 30s with 2 young kids spending €2.5k in rent and €2k monthly in creche fees. They're thinking if we're going to do it we should do it now, before kids start school etc etc.

I certainly think it is something people will consider carefully.
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13-05-2020, 21:38   #15
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... on top of the eight hours or so they work in the office. No change there then
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