The Rise of the Machine – Impacts and applications of AI in real estate
Artificial intelligence (AI) has been at the forefront of the human imagination over the past decades, making regular appearances in different spheres of our society, from the latest blockbuster movie to literature and cartoons. Through the eyes of the past, this new technology has been viewed as having the potential to be tremendously transformative and disruptive to many, if not all, areas of modern society.
With the growth and expansion of AI in recent years, this transformation and disruption has begun to be felt across a variety of industries. Coupled with the immense availability of data, AI has created opportunities to increase efficiencies, reduce costs and increase revenues, even within traditional real estate. These opportunities are also beginning to shape the way we work, and the skills which will likely be demanded of workers in the future.
Demonstrating this growing interest in AI within the real estate sector, venture capitalists have invested almost USD 80 billion over the past five years in PropTech, or Property Technology, start-ups that leverage technology to manage, assess and transact real estate, according to figures from VentureScanner. This trend highlights the opportunity to leverage on new technologies to deliver the fundamental elements that real estate investors and owners desire: timeliness, accuracy, efficiency and transparency.
Among the plethora of potential applications within real estate, AI can be used to harness real-time building data to proactively predict future asset challenges within residential and commercial buildings. This data can also then be used to create a better living and working environment, through the monitoring of factors, such as temperature, lighting and motion. CBRE’s 360 app, for example, leverages AI to provide an enhanced workplace experience for app users, driven by recommendations based on learned employee preferences for everything from temperature to meeting room locations.
In the case of the industrial and logistics sectors, AI is also increasingly appearing in the form of robotics, used to manage product handling and sorting as well as facilitate delivery processes. Data centres have also proven to be an asset which can benefit from AI, through diagnosing potential problems early on and facilitating predictive maintenance, all while reducing costs and increasing asset reliability.
In the case of asset valuations, AI applications have already emerged, as evidenced in the case of Zillow’s Zestimate product in the US, which estimates the market value of residential product using proprietary data and public information. This application of automated valuation models (AVMs) has spurred the interest of expanding these capabilities to other real estate sectors, and while traditional real estate appraisal will remain essential to create a full picture of each asset, CBRE Research predicts that by 2030, 90% of commercial real estate assets will be appraised using AVMs as a starting point.
The rise of AI is expected to continue transforming real estate, an industry that is still comparatively lagging in the digital age, relative to other sectors. It is unlikely that machines will completely replace the human role and touch. However, real estate professionals will be required to adapt and embrace the power of technology to remain competitive in what is likely to be an entirely different marketplace by 2030.
• Gabriella De La Torre – Director: Consulting, CBRE Middle East