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How Do Trends Toward Teleworking Affect Homebuilding In The Uk?
Location formerly determined the value of most real estate. But technology now enables working from home, altering the need for homes to be near workplaces.
The key driver in building new residential communities, in the UK as elsewhere, has historically been about proximity to workplaces. But to what degree do trends toward telecommuting (a.k.a. telework or remote work) affect that? When employees can work from anywhere a broadband connection reaches, does this alter the equation – making, perhaps, the location of housing irrelevant?
This is a particularly interesting phenomenon from the perspective of those engaged in developing housing on a large scale. Opportunities for capital growth abound for UK land investors and communities where employment is growing and where land can be converted from under-use to homes and commercial properties. If the matter of proximity to transport and workplaces is of lesser importance that then suggests that homes can be built in locations where other factors are more favourable (such as lower-cost land, lower development costs overall, and access to other amenities such as recreation and education that may not be available elsewhere).
It helps to review the statistics and trends. The phenomenon of working from home is trending upward, but there is a mixed picture in how that actually affects companies, careers and living arrangements. Consider the following:
More employers are offering teleworking than ever before - From 2006 to 2011, the number of employers in the UK who offer teleworking rose from 13 per cent to 59 per cent (source: CBI, UK business lobbying organisation). Another benefit to employers is that they can save money by reducing their overall rented office space (the average real estate savings is about £6,400 per worker/workstation).
More employees want to telework than ever before - Younger people who make up a large part of job-creating growth industries (particularly in the tech sector) place higher values on flexible work arrangements, according to a meta-analysis of 500 research studies on telecommuting practices and attitudes made by the firm Global Workplace Analytics. One study showed that of 1,500 technology professionals in a survey, 37 per cent would take a 10 per cent pay cut in order to receive work-at-home privileges. And why not? Their savings in commuting costs and hours may well make up for that 10 per cent loss in income.
Teleworking is rarely an exclusive mode for most workers - For various reasons that include career impairment (bosses may be more inclined to promote the people they see and not those they communicate with only electronically), most workers recognise the need to be physically on-site with employers at least part of the time. But that varies by company: Sir Richard Branson of Virgin Airlines wholeheartedly embraces it, while Yahoo CEO Marissa Mayer began phasing out the practice in 2013. Only in companies such as call centre firms are complete teleworking arrangements maintained; of course for a large portion of the self-employed their homes are their workplaces.
In two-earner households, it’s rare for both to cyber-commute - It’s still more the exception than the rule that a worker will have teleworking arrangements with an employer. Even more rare would it be if both heads of a household had those same privileges. So in younger families – those that have the income required to buy a home – at least one wage earner would need to slog their way to work by normal means (car or public transport in most instances).
So for developers, investors (for example, property fund managers) and homebuilders, the word is that location still matters, but perhaps a little less so than ten years ago. Where this will trend in the future is anyone’s guess, of course.
Investors drawn to the high-demand housing sector should consider the location of a proposed residential building project among many other variables (likelihood for planning authority use change permissions in particular). Speak with an independent financial advisor to get a fuller perspective on where land and property investments might help achieve overall financial objectives.
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