Latin America. Artificial Intelligence (AI) is a topic being debated in organizations around the world, and real estate is no different. Although real estate professionals see AI as having the potential to be a game-changer, there are still many unknowns about how this advanced technology can be effectively applied in the sector.
Recently, JLL brought together a leading group of experts to answer fundamental questions about AI and explore the strategic advantages it offers in a webinar titled "The Future of Generative AI in Real Estate." The panel of experts included leading JLL professionals, who shared their knowledge on the topic.
First, the panel highlighted that AI has the power to transform the way people live, work, and play, which in turn will reshape the real estate market. While there are concerns about potential upheavals in the market due to impending job changes, the net effect of market turmoil and the creation of new jobs is expected to be a significant economic increase. Several reliable research institutes estimate that AI's potential contribution to the global economy will exceed $15 trillion.
In addition, the five key impacts that generative AI will have on the real estate sector were discussed. These include geographical changes in market growth, alterations in the demand and profitability of different types of assets, creation of new assets and product types, emergence of new investment models and real estate revenues, as well as the evolution of the functions and design of spaces. AI is expected to have a similar fivefold impact on the real estate sector.
The second highlight concerned how AI companies and supporting infrastructure will drive real estate demand in different markets. The growth of the global AI ecosystem encompasses hardware, computer systems, models, and applications across various industries. However, implementing AI requires significant resources and supporting infrastructure, such as power, cooling facilities, and data centers. The siting criteria for these AI infrastructures differ from those of traditional offices, and factors such as competitive energy prices and energy consumption regulations are driving growth into less saturated markets.
The panel also noted the importance of cybersecurity and data protection in the implementation of AI. Real estate investors and developers recognize these aspects as the most important challenges when deploying new technologies. For this reason, policies and regulations are being developed to regulate cybersecurity, data quality, intellectual property rights, data privacy and security, as well as to mitigate social and environmental risks, such as carbon emissions.
Finally, the panel emphasized that AI will further transform the way the real estate sector operates. More than 80% of companies in the sector plan to increase their technology budgets in the next three years. There are more than 500 AI-powered companies that are providing services to the real estate sector, spanning areas such as investment management, valuation and transactions, compliance, investment and capital planning, construction and project management, design and modeling, real estate exploitation, energy and utility management, portfolio management, leasing and brokerage, market research, and data analytics.
The panel agreed that generative AI is an enabler that eliminates tasks, but not jobs. However, they stressed the importance of having a clear purpose and attracting the right talent to harness the full potential of generative AI. While acquiring top AI talent can present challenges, a multi-faceted approach was recommended that includes upskilling existing staff, hiring new talent, collaborating with external experts, acquiring companies, and outsourcing tasks.
In short, generative AI has the potential to revolutionize real estate. As the industry adopts and better understands the applications of AI, it is essential that an ongoing dialogue is opened and ways are actively sought to make the most of this ever-evolving technology. Leveraging generative AI will not only drive innovation and growth in the real estate industry, but it will also allow the sector to stay ahead of the curve in a technology-driven world.