The advantages Australia's CBD have: Citi
Australia's CBD’s have tremendous advantages that will keep them relevant, with new key drivers to come post pandemic, according to Anthony Si, senior investment strategist for Citi.
"Today’s white-collar workers are living through a radical transformation of professional life, one economists say is already beginning to jump-start economic productivity by removing the commute to work, and providing workers with greater flexibility on how to manage work/life balance.
"Flexible working arrangements are expected to continue beyond the pandemic, and it is accelerating innovation by pushing companies to invest in technologies and processes that allow for remote work access and collaboration.
"In turn, this has weakened the gravitational pull of city centers, with new forcests now reshaping knowledge-based economies. Public transport journeys into cities are down, as are coffee shop sales, while demand for real estate in leafy suburbs is up," he noted.
But Si suggested CBD’s have "tremendous advantages" that will keep them relevant, with new key drivers.
For starters, CBD’s are the focus of state infrastructure.
"They are also often located in prime positions, making the available real estate attractive.
"There is no risk of dormant sky scrapers slowly falling into a state of decay, but residential may play a greater role in defining the makeup of a CBD.
This would create a period of transition, and yes, a number of business relying on the current status quo may fail, but they will be replaced by restaurant precincts, leisure areas and services more tailored to a mixed office/residential make-up."
He noted last year a study by Microsoft and Boston Consulting Group across 15 European countries found just 15 per cent of organisations had flexible working plans before the pandemic, but this had increased to 76% by year end, with more than 88 per cent of organisations expecting hybrid working to play a greater role going forward.
"It may seem odd to be focusing on work related changes when discussing inner city property opportunities, but understanding how these forces will change the work force is vital to understanding where opportunities will emerge in CBD and inner-city residential housing.
"Inner City living will continue to exist but it will take time to understand how the demographics are changing and what type of person will be most attracted to changes that take place in CBD’s and how that impacts inner city suburbs.
"It is evident there is room for growth across all property markets," he said.
