CBD office workers to drop 15pc, forecasts UBS

The percentage of people working only in the office falls to 18 percent from 47 percent previously, while the proportion of hybrid workers rises to 61 percent from 33 percent previously, UBS forecasts .

The number of people who only work from home increases slightly to 21% from 20% previously.

UBS estimates that a decline in people driving to work will hit Transurban’s proportionate revenue (which reflects revenue from its motorways) by about $110 million compared to pre-pandemic levels, excluding revenue from the new roads that opened after December 2019.

However, Transurban’s ability to raise toll rates in line with inflation, stronger truck traffic and the opening of new motorways such as Sydney’s new M5 tunnels (which began to take traffic in mid-2020) increase the company’s total proportional revenue by more. Between $1 billion and $3.8 billion in fiscal 2024 compared to fiscal 2019, the bank says.

Transurban chief executive Scott Charlton has also claimed that some people who only come into the office 2 or 3 days a week favor driving their cars over public transport.

The motorways group, which publishes its annual results on August 18, has yet to release traffic figures for the latest financial quarter ending in June.

But data for the three months ending in March showed like-for-like traffic flows (excluding new toll roads that opened during the pandemic) were still below 2019 levels in all cities except Brisbane.

Traffic in Sydney and Brisbane was partially affected by east coast flooding as well as higher fuel prices.

UBS argues that the increase in people choosing to drive instead of taking the train or bus is temporary and that people may be inclined to switch back to public transport to save money due to rising costs of groceries and energy, while fuel costs also remain high.

Their estimates of Transurban traffic flows in 2024 are now 5% lower than their February 2020 forecasts.

The bank has also cut its 2023 office revenue forecasts for property groups Mirvac and Dexus, predicting 8-13 per cent contracted vacancies in the office market compared to levels before the Covid.

“We are cautious in the office as risks are tilted to the downside and the trend of working from home appears more persistent and structural than previously thought,” UBS said.

More to come

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