The arrival of ChatGPT in November 2022 catapulted generative AI into the public consciousness, becoming the fastest growing consumer application in history, embraced for everything from writing music lyrics to writing code.  But AI isn’t new, having been around in some form for decades; ChatGTP is only one of its most recent and visible applications.  What’s different now is that it is accessible to more people, and in turn, starting to touch every industry. Real estate is no exception.

One of the main questions around AI is its impact on employment. Will AI take over human jobs or complement them?  The OECD predicts that 27 per cent of jobs are in occupations at high risk of automation.  But AI is likely to augment rather than replace human workers, often enhancing their jobs. Simple process-driven elements of roles have the greatest scope to be automated, boosting overall productivity.

AI will lead to whole new categories of jobs.  There’s precedent for this; 60 per cent of today’s workers are employed in occupations that didn’t exist in 1940, according to Goldman Sachs.  Coupled with higher productivity, they predict that generative AI could raise global GDP by 7 per cent over a 10 year period.

This is already playing out in the development of whole new subsectors of tech. Deep Tech, a tech subsector that includes artificial intelligence, is emerging as an industry in big tech cities such as New York, San Francisco, London and Seoul, where top universities and deep pools of skilled talent can be found. We’re also seeing it develop in smaller cities such as Bristol and Cambridge in the UK, Munich in Germany, and Raleigh-Durham and San Diego in the US, offering cost-advantages to this knowledge-intensive industry. That’s driving economic growth, and in turn demand for homes, offices and labs in these places.

More directly, AI needs substantial computing power, and in turn, data centres.  The vast computing power to train ChatGPT, and other large language models, is only set to increase as the technology advances. This is fuelling global growth in data centres, and our analysis suggests that an additional 110,000MW of datacentre capacity is needed across 13 of the biggest global markets alone, with the appropriate renewable energy sources to operate it.

The property industry is starting to embrace it as a tool.  For building managers AI can be used to run buildings more efficiently, interpreting data in real time to ensure building heating and cooling systems respond to weather conditions and usage patterns. This can help reduce energy or water usage and in turn the building’s environmental impact. For leasing agents, AI can be used to analyse large quantities of leases to extract expiry and other key lease event information, ensuring optimised portfolios. Conveyancers can use AI to automate and speed up processes, ultimately making property markets more liquid.

As a fast-moving technology, challenges abound. Regulators are finding themselves on the backfoot as the technology finds application in new ways, disrupting standard practice. AI models retain everything that is input, creating risk around data protection and security. The need for more data centres brings with it environmental challenges, although the use of on-and off-site renewable energy sources is becoming more common.

AI is not a passing trend.  It is already starting to transform industries and create new opportunities –  and challenges – for real estate professionals, investors and occupiers.  But taken as a tool to enhance productivity and unlock growth, it has the potential to make a positive contribution to our work, our lives and our real estate.

Further information

Contact Paul Tostevin

Impacts: Technology