PM (Property Managers) Forum

JOINT PAM/PM FORUM (19 SEPT 2023): A SUMMARY

RICS, WESTMINSTER SQUARE, LONDON

The following notes are a summary of the discussion that took place at the joint meeting of Remit Consulting’s Property Asset Managers Forum and Property Managers Forum, in September 2023.

“Keeping up in the Real Estate business today means understanding the AI”

Artificial intelligence (AI) is rapidly transforming the real estate industry in a number of ways, both big and small. AI is a broad term that encompasses a wide range of technologies, including machine learning, natural language processing, and computer vision. AI systems can be used to automate tasks, analyse data, and make predictions that would otherwise be impossible.

“AI in all industries is experiencing phenomenal growth”

The global AI market is on a trajectory of exponential growth, expected to surge from $136.8 billion in 2021 to $1.586 trillion by 2028, at a growth rate of 33.2%. This growth is being driven by a number of factors, including the increasing availability of data, the development of new AI algorithms, and the falling cost of computing power.

“Real Estate is about to change – fast"

AI is already having a significant impact on the real estate industry. Some of the ways that AI is being used in real estate include:

Property valuation: AI can be used to analyse copious amounts of data to generate accurate property valuations. This information can be used by buyers, sellers, and investors to make better decisions.
Lead generation and qualification: AI can be used to identify and qualify potential leads for real estate agents. This can help agents to save time and focus on the most promising leads.
Market analysis: AI can be used to analyse market data and identify trends. Real estate professionals can use this information to make better investment decisions and advise their clients.
Customer relationship management (CRM): AI can be used to automate CRM tasks and provide insights into customer behaviour. This can help real estate professionals to improve their relationships with clients and close more deals.

Here’s what leaders in the property industry think will be big...

To delve deeper into the real-world applications and perceived benefits of AI in the real estate industry, we conducted an interactive business proposal session with top leaders in the property manager space. Our discussions yielded some interesting insights into people's opinions of AI and its potential usefulness.

Our group focused on cost savings:

Key activities that AI could be tasked with within real estate, besides those mentioned above, include reducing costs, the use of chat-bots, predictive analytics and automating tasks. Exploring the key activities, stakeholders, value propositions, upsides and downsides, cost structure and key challenges for each topic with the heads of property and asset management uncovered their views on AI as it currently stands.

For example, there were many obvious uses for reducing costs within building technology (such as CCTV/access control, heating and other utility monitoring, ESG data collection, safety, incident monitoring, resource deployment and better use of flex space). However, while everyone is talking about AI’s ability for use in predictive analytics, its use is less obvious when it comes to real estate. One example raised in our session was for predictive maintenance, but other possibilities (such as rental vacancies and tenant turnover) were not considered, suggesting the possibilities of AI have not been fully explored by those in the industry.

All levels of the business must be involved – and no one knows who should pay for it

What was clear from our discussions was that for something like AI to be successful, you need buy-in from all parties, such as managing agents, occupiers, owners, site staff and suppliers. It was also pretty well agreed upon that while the initial cost will generally come from the managing agent, this charge should be passed on to those who benefit most, whether that be the managing agents, the occupiers, or the owners, yet many property managers are prioritising their budgets on more immediate issues. This is an unfortunate barrier given many advantages of AI were brought up – efficiency and therefore better value for money, increased accuracy, freeing up staff for more value-adding tasks such as client engagement, better-informed decision making, 24/7 access and ability to quickly identify trends humans may fail to spot were common themes. See the appendix for the full responses during our interactive session with the heads of property and asset management.

What will stop the adoption of AI?

While AI has the potential to revolutionise the real estate industry, there are also some challenges and considerations that need to be addressed. One challenge is that AI models can be biased if they are not trained on high-quality data. Another challenge is that AI systems can be complex and difficult or costly to implement.

Start-ups may be a risk

Some mentioned that it was a juvenile market and placing your bets on one unproven supplier was a risk. Other risks that spread across all potential uses for AI included the risk to reputation if something goes wrong, the type or quality of the data the AI is trained upon is difficult to access, and the overreliance on AI could lead to homogenous thinking and lack of diversity in decision-making.

The sector needs more education

The leaders of real estate in the room acknowledged that there is a need for more education and awareness about the capabilities of AI and its potential benefits for the real estate industry. They expressed interest in seeing more real-world examples of AI applications and how they can be tailored to specific real-estate scenarios.

Looking forwards

The future of AI in the industry appears bright. As AI technology continues to develop, we may expect to see even more innovative and transformative applications of AI in property, such as the use of AI to clean large amounts of ESG data. AI could also be used to develop new ways to design, construct and manage buildings, and could be used to create new investment opportunities.

What does this mean for us?

AI is already having a significant impact on the real estate industry, and its influence is likely only going to grow in the years to come. AI has the potential to revolutionise the way that real estate is bought, sold, and managed. However, there are also some challenges and considerations that need to be addressed, such as the potential for bias and the complexity of AI systems.

While there are some challenges to the adoption of the technology, this has always been the case with advancing technology. Yet, as with most technologies whose impact spans multiple disciplines, it is likely that real estate will find plenty of practical ways to implement AI to improve their offering, and potentially innovate and transform the industry as it develops.