CRE analysts are currently investing much headspace on how AI will affect each asset class in the short and long term. But if there is one thing on which they agree it’s that AI isn’t about to trigger mass job losses but rather change them completely.
“Everyone’s job is going to be unbundled and rebundled as AI enables more of the tasks we do to be automated or augmented in various ways,” says Antony Slumbers, a leading digital strategist and technology adviser to the UK’s commercial real estate industry.
“AI will allow us to fundamentally rethink how work is done and value is created.”
Rapid change
But for this to occur, organisations need to start now on redesigning work around what the new technologies enable, Mr Slumbers adds, pointing out the introduction of the electric engine replacing steam power as an ideal analogy. “Great productivity gains didn’t manifest themselves until factories were fundamentally redesigned to take advantage of multitudes of standalone electric power machines, “ he says.
“This process took four decades.”
As for AI? The process will likely take just one decade Mr Slumbers says. “One has to assume and plan for rapid change on this front.”
Australian analysts hold similar sentiments. AI will result in the nature of jobs “changing significantly” rather than disappearing entirely according to the Cromwell Property Group’s examination of AI’s impact in The Power of AI in Real Estate: A Paradigm Shift The-power-of-AI-in-real-estate-a-paradigm-shift.pdf (cromwell.com.au)
Jobs will be displaced, others altered: history shows about 60% of workers today are employed in occupations that didn’t exist in the 1940s. AI net job losses are possible, Crowell’s analysts conclude, yet historical data and human adaptability suggests economic and employment growth is the most likely outcome of AI’s impact.
Using AI To Full Effect
Property professionals also see their roles “bundled and rebundled” by AI. too will have to deal with AI’s impact on how they execute their duties. According to Raj Singh CEO of property deal management software firm Altrio, one of the the challenges facing real estate professionals is determining how to fully benefit from predictive AI. He believes the availability of data - or lack thereof - is hindering the adoption of predictive AI within real estate for everyone from agents to investors.
Regarding property investing, Mr Singh says, AI has not yet meaningfully improved analysis due to the lack of “accurate, timely and consistent information to feed the models”.
The answer lies in building electronic platforms and data gathering tools that can connect real estate professionals, bringing “processes online to generate normalised, real-time data that can power the application of current and future technologies” Mr Singh says.
“Within real estate capital markets, data and connectivity are the two key factors limiting productivity of people working in the industry,” Mr Singh says. “AI is fundamentally an application that must run on a platform.”
Enhancing or disrupting?
However, generative AI and the large language models it uses will enhance instead of disrupt the real estate investment industry and the roles of investors, Mr Singh argues.
“Understanding a real estate asset's potential value does involve analysing a lot of information about the asset, the tenants, the operating costs and local market,” he says. “But the job of a real estate investor differs in many important ways.” This is because of the dynamic nature of the real estate industry, where the factors “both within the market for physical space and the market for capital” are ever changing, he says. In contrast, the facts used by a lawyer to review a commercial agreement or a doctor determining a diagnosis for instance are “relatively static”.
“The ability to rapidly synthesize unstructured data and query that data using natural language will allow investors to churn through analysis much faster and spend more time considering qualitative and competitive dynamics,” Mr Singh says.
Mr Slumbers agrees but adds that real estate investors will need to decide what to automate, and ask “where can we be ‘augmented’ by AI and what tasks do we want to retain for humans only?”
“Is this enhancement or disruption? Don’t know but the future will not be like the past.”
Next month: AI’s Impact on CRE’s biggest sector: Offices