At the end of September, Iberian Property hosted a lunch in Estoril with leading representatives of the Iberian real estate industry to discuss how AI may drive real estate transformation. Bill Kistler, Founder & Partner at UrbanOvation was the special guest responsible to moderate and collect the most relevant insights on the theme, which you can read below.
With new products like ChatGPT, AI’s potential to transform the global economy has captured the world’s imagination, and the general consensus is that it has enormous potential to reshape real estate, with near and long-term impacts ranging from the emergence of new markets and asset types to innovations in investment and revenue models.
Opinions during lunch were very much divided, but a common concern was raised: how to regulate AI usage. Legislators must be much more agile in order to produce a framework that society accepts, and investors are not so optimistic about that celerity process.
Also worrying is both the ethical and security sides of the question, as many of AI applications will involve document sorting, data standardization, price modelling and prediction for investment management. The value of judgment will be increasingly important to dissect what is AI produced, and this requires having prepared people to handle this (R)evolution, otherwise AI may not be as useful as we expect. For this reason, growth is likely to be concentrated in locations where AI talent is available, namely tech hubs, innovation centres and universities.
Over time, AI has the power to transform how people live, work and play. 2030 is just around the corner and in that year, there are expected to be around 8.5 billion people on the planet and four different generations active in the labour market at the same time (Baby boomers, Gen X, Millennials and Gen Z). Thus, Life-going education will be key more than ever to assure society does not divide itself, and to leverage AI as a balanced lifestyle tool.
AI driving real estate transformation
Commercial real estate is set to feel AI implementation effects. There are five adaptive ways, which according to JLL research are probable to materialize on how real estate respond to this technological change:
- Geolocation: Geographical shifts in market growth.
- Demand: AI development calls for more and better data centres, energy grids and connectivity infrastructure.
- New asset types: the birth of the ‘real intelligent building’ is imminent. AI-compliant infrastructure will become a default just as internet connections are a default feature of current buildings. AI will also help deliver net-zero buildings with high sustainability performance.
- Revenue & Investment: AI-powered underwriting and processes will enable faster transactions and more efficient understanding of properties and markets, catalysing investments at a global scale. AI-compliant infrastructure and the ability to plug in multiple systems could also enable the expansion of ‘space as a service’ models and new revenue streams for landlords and developers.
- Design: AI will allow for experience-driven design and highly customizable environmental settings.
Organizations will need to reflect on several key questions as they consider the right path forward, but the conclusion is clear: we can’t always be on react mode, it’s time to embrace pilot mode.