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What Does the WFH Revolution Mean for Property Investment?

Many employees and businesses quickly embraced the working from home revolution after the government imposed a lockdown in March 2020. 

Employees found themselves enjoying a much better work-life balance, avoiding costly, time-consuming and crowded commutes to work and realising they no longer needed to live near their place of work. 

Employers, meanwhile, not only realised they didn’t need so many people working on-site at any one time but also that they didn’t need to pay so much rent for large office premises.

Unsurprisingly, this has led to countless debates about what this means for the property market and for investors in particular. 

Had the age of the traditional office come to an end? Would more people now want space for an office at home? Would they shun city centre apartments for homes in the countryside with a garden?

Nearly two years after we were plunged into lockdown and city centres became ghost towns overnight, our lives are closer to normal than they’ve been in a long time. So let’s try to answer these questions and see what the working from home revolution has meant for the property market.

According to the latest data from Savills, commercial property investment volumes in the UK went up by 21% last year, with investors spending £57 billion on properties such as offices, retail premises and warehouses. 

Savills expects to see a further 10% increase this year, and points out that while hybrid working has been widely accepted, confidence remains in the office sector, especially in places such as Oxford and Cambridge. In fact, figures showed that office occupational demand data was relatively positive last year, with some locations remaining around their five-year average.

This pattern has been backed up by a new white paper called “Covid City Exodus: Reality or Urban Myth”, written by Bob Pannell, an economist with Atelier.

He believes that fears of homebuyers eschewing urban areas for the countryside have not come to pass, saying the latest data “debunks the myth that Britain's cities are in decline”. As the white paper states, sales increases in towns and cities are currently seven per cent ahead of those in rural locations.

Graham Emmett, co-founder of Atelier, agrees that fears over Covid spelling the end for the UK’s cities have proved to be “grossly premature”, and insists they remain “great places to live and invest in”. As a result, he believes the long-term outlook for the property markets in major cities is positive.

That’s not to say the so-called race for space isn’t happening among some people, with many people wanting spare rooms in which to set up a dedicated workspace, a garden or access to green spaces in their areas.

For instance, the latest house price figures from Halifax show that house prices in some UK towns went up by nearly one-fifth in the 12 months to October 2021. Taunton in Somerset saw the biggest increase of 21.8%, followed by Newark in Nottinghamshire (20%) and Rochdale in Greater Manchester (18.5%) - all well above the nationwide price increase of 6.2%.

It’s notable that these places are all close to the countryside, but boast strong transport links to major towns and cities, pointing to many people planning to split their time between home and the office and enjoy easy access to the shops, hospitality businesses and leisure amenities on offer in towns and cities. 

That bodes well for the future of urban property markets, especially as the nature of these businesses means home working isn’t possible for their employees, which in turn means demand for nearby residential accommodation is likely to remain strong.

The most extreme fears of towns and cities remaining deserted haven’t come to pass, so investors can be confident they’ll find many lucrative opportunities in both urban and rural locations as people aim to adjust to a post-pandemic world.

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