After major advances in artificial intelligence (AI) over the past few months, a new report delves into how the real estate industry will change as technology trends change.
Global real estate firm JLL says the potential for AI to transform business, industry and society has grown for decades, but recent breakthroughs have moved the science from ‘niche to mainstream’. pointed out.
AI and generative AI ranked among the top three technologies expected to have the greatest impact on real estate over the next three years by investors, developers and corporate occupiers, according to JLL’s 2023 Global Real Estate Technology Survey .
AI “requires the ability to learn from experience, understand complex concepts, recognize patterns, interpret nuances in natural language, and make decisions independently, using machine learning and deep learning algorithms.” broadly defined as a technology that accomplishes a task
Generative AI, on the other hand, is, as the name suggests, a subset of artificial intelligence focused on generating new content, designs, or solutions.
“The proficiency of this technology in writing, drawing, coding and composing compels business leaders to consider both the opportunities and threats AI poses to their companies’ future,” the company’s report said. ing.
But while there is strong interest in incorporating AI into business operations, especially commercial real estate, the details of ‘what happens next’ for business leaders remain unclear, JLL said. bottom.
The company noted that respondents showed the lowest understanding of AI and generative AI when compared to other surveyed technologies such as blockchain, virtual reality and robotics.
JLL remains keenly aware of the transformation to come, highlighting the relentless pursuit of ways in which real estate industry leaders can harness the transformative potential of AI.
This report focuses on three key areas to reveal how AI will transform real estate practices.
- AI boosts productivity
JLL predicts that commercial real estate, especially the workforce, will “feel the impact” as AI is projected to change the way society “lives, works and plays” in the long term. there is
Nearly 80% of jobs are being disrupted by AI, according to OpenAI, and JLL said this important figure “has sparked a wave of concern” about potential havoc in the real estate market due to imminent labor market changes. ” he pointed out.
Despite growing concerns about the potential impact of AI integration on human labor market participation, JLL offers a contrasting perspective.
“When technology enables fewer people to achieve the same level of productivity, more people will be able to create new areas of opportunity,” the report said.
JLL cited a study by Massachusetts Institute of Technology economist David Autor that found that technology-driven new job creation explains more than 85 percent of U.S. job growth over the past 80 years.
The company also said that AI service providers are making a conscious choice to seek a human-centric approach, and that AI service providers are not “auto-pilot” products meant to help humans. He also referred to a statement by Microsoft CEO Satya Nadella that it is developing a “Copilot” product for It is a complete replacement of the human role.
Yao Morin, chief technology officer at JLL Technology, said AI should be seen as “a valuable enhancement of humans, not a replacement.”
The vast amount of data generated through the digital revolution can now be harnessed and analyzed by AI to generate powerful insights that will shape the future of real estate,” she said.
JLL also cited a PWC study that showed that productivity gains at an aggregate level are projected to increase global GDP by 14% by 2030.
2. Technology hubs will become hubs for the growing AI ecosystem
According to JLL, the growth of AI companies and the infrastructure that supports them is likely to boost real estate demand, especially in regions designated as technology hubs.
The report noted that major technology hubs such as the San Francisco Bay Area, Boston, Seattle and New York have already become hubs for AI companies.
Additionally, demand for AI talent is accelerating, with AI job openings up more than 250% since early 2021, according to JLL research.
“Long-term, this means that AI talent is likely to grow where it is available: major and established secondary technology hubs, innovation centers and universities,” the company said.
According to JLL, the AI sector requires extensive resources and supporting infrastructure, including data centers and computing power, to contribute to the global expansion of colocation, hyperscale and edge data center markets.
“Furthermore, the continued expansion of AI applications will drive the need for more power, more cooling facilities, and more data centers. It will require occupied space.”
According to JLL Global Data Center Outlook for 2023the global colocation data center market is expected to grow at an annualized rate of 11.3% (CAGR) from 2021 to 2026.
Meanwhile, the hyperscale data center market is expected to grow even faster with a CAGR of around 20%.
3. Technological transformation by PropTech will be further advanced by AI
The real estate industry is active in adopting technology through the PropTech sector, with more than 80% of surveyed real estate occupiers, investors and developers revealing they plan to increase their real estate technology budgets over the next three years. I’m here.
“This is underpinned by a mature PropTech ecosystem. Technological solutions now exist for almost every aspect of real estate functions, including investment management, design and construction, building and facility operations, and portfolio management. ,” said JLL.
The company said that this “laid a solid foundation for AI integration” and that the real estate sector is now integrating AI-powered solutions into various functions, leading to increased efficiency and reduced costs. said to be in a position
Raj Singh, managing partner of JLL Spark, said AI “is helping to streamline the industry.”
“As venture capital investors, we have seen many experiments with the latest AI capabilities, but the key to making the leap from pilot to successful product is data quality, workflow integration, intuitive It depends on the output interface,” he added.
