How AI is shaping the future of real estate
Proptech insight by Samit Sheth
Despite massive advances in Artificial Intelligence (AI) over recent years, it is generally acknowledged that machines have not yet achieved general intelligence - the threshold for intelligent agents to understand or learn any intellectual task that a human being can.
This can be primarily demonstrated in the increased investment in AI from $3 billion in 2012 to $75 billion in 2020, a 2500% increase.
Spearheaded by the technology, retail, healthcare, transportation and finance sectors, AI has already penetrated global markets, disrupting the way of work in several industries.
However, real estate, has been slower in the adoption of AI and other emerging technologies. Still, it is bound to change given the rise in venture capital investment and the PropTech market’s emergence which is anticipated to grow from $18.2 billion in 2022 to $86.5 billion in 2032.
AI applications abound
Agents and brokers have benefitted from chatbots for some time. These ‘virtual assistants’ utilise AI to undertake various activities such as lead generation (by integrating customer and property data to identify genuine leads). As clients have become more comfortable chatting with bots, agents are freed up to focus their time and energy on higher priority tasks.
Another common application of AI technology has been the creation of data driven property analytics and valuation models. Analysts, valuers and consultants are able to call upon an increasing range of AI powered platforms to assess data, identify market trends and produce more accurate forecasts of future performance.
Property managers are also beneficiaries of AI applications capable of simulating a wide range of potential scenarios, allowing them to quickly react to changing levels of usage and demand across a holistic array of services.
Investors are turning to AI based solutions incorporating machine learning to forecast future performance and optimize returns across their portfolio.
Automated document processing and procedures to reduce risk rarely make the headlines, but both comprise areas where AI technologies have already improved efficiency and increased performance and returns across the entire real estate spectrum.
Digital delivery and innovation
Given the far-reaching application of AI, it is unsurprising that the design, delivery and construction process has experienced something of a transformation across the Middle East over the past 5 years.
Early stages of this transformation involved the application of different and largely unconnected digital technologies at different stages of the real estate life cycle (design, delivery, operation, etc). Advances in the field of AI have now ushered in more advanced and integrated applications, with an increased focus on virtual design and construction (VDC).
Developers, contractors and owners are increasingly turning to AI driven solutions to create ‘enterprise architecture road maps’ combining separate but interconnected technologies across a project’s life cycle.
Emerging technologies such as Alice, a JLL Spark backed proptech, are taking it a step further, reducing project risk, increasing profitability, and digitizing the means and method of construction by running AI based simulations which can generate thousands of project scheduling options and enable developers to easily run “what if analysis” to optimize construction and delivery planning."
The creation of ‘digital twins’ epitomises how AI driven solutions are transforming the design, delivery and operation of major real estate projects across the Middle East.
While every project is unique, common features of a ‘digital twin’ include laser scanning of designs to create virtual 3D models that can be tested from various directions. Among the different layers that would typically be produced as part of the ‘tech stack’ are those relating to cost management of the construction, space planning and facilities management of the completed project
Just as the internet has prompted more open access architecture, advances in AI have resulted in technologically agnostic solutions that allow for a range of different technologies to be tested, applied and potentially replaced in a ‘plug and play’ format. Stakeholders are no longer beholden to a single enterprise-wide solution and are free to ‘mix and match’ technologies from different vendors according to their relative performance at different stages in their project’s life cycle.
While many of the initial applications of AI technologies may lay in the US or Europe, Proptech is a great geographic leveler, allowing technologies developed in one market to be adopted and delivered in other cities, regardless of the level of maturity of its real estate market. The lessons learnt from designing digital twins in California can quickly be applied to projects from Cairo to Cape Town. With this in mind, JLL is working with Stanford University on their Digital City program
Within the MEA region, the initial adoption of AI driven ‘digital twins’ has focused on major urban projects, which comprises new and master planned CBD, largely controlled by a single owner. As the technology becomes more tried and tested it is likely to trickle down and be utilized across a wider range of smaller projects.
The range of AI based tools and technologies available to real estate stakeholders is expanding rapidly, resulting in an associated decline in their cost. The same digital twins that are currently assisting urban planners create liveable cities, can be used by architects in the design of projects, property developers seeking virtual design and construction tools, facility managers looking for operational efficiencies and major space occupiers seeking to maximise their space utilization.
Given there is no single technology solution underpinning AI or its application in the real estate space, the key to future success will involve the identification of a range of independent but consistent technologies that can be combined to create an enterprise architecture road map covering the entire life span of any real estate project.
This requires a flexible and technologically agnostic approach that is able to identify the right tool for the right job at the right time. AI may not yet be sensory or sentient, but we can expect it remain at the core of the PropTech transformation of the real estate sector in the MEA region and beyond.