What is the most significant impact of AI on today’s real estate sector? Investors must now assess every opportunity through an AI lens.

While traditional criteria remain absolutely fundamental – such as the secular trends influencing the sector, the location of a building and its sustainability profile, and the quality of tenant amenities – AI is influencing how the built environment evolves.

While there are some obvious considerations like the volume and shape of space a tenant uses, we need to consider factors beyond these such as the flexibility and inherent adaptability of assets in an AI-centric world.

Some of the questions we now ask ourselves include how will AI influence the sectors and cities we invest in, how will buildings evolve as AI adjusts societal behaviours, which assets risk obsolescence, and which technologies will be needed to make buildings more efficient and managers more effective.

Emerging AI trends in today’s market

Even with AI being relatively nascent, and investors needing to remain humble about what is not clear, there are a number of trends which can be seen in the market today. Investors able to accommodate these considerations into investment strategies are likely to be the ones to capitalise tomorrow.

Bifurcation is accelerating across all sectors

• AI is accelerating bifurcation across all real estate sectors. The gap between future-ready and obsolete assets is likely to widen. While the office market may be front of mind for many, we see this trend impacting across sectors. In logistics, for example, access to power and supporting electrical infrastructure is becoming increasingly important. In locations where grid capacity is constrained, the right location may be more important to long-term value than the current quality of the building, which can potentially be improved through active management.

Active asset management through the lens of AI and, in particular, underwriting for future capabilities must, today, be central to decision making.

Cities not just assets will be impacted by AI too

• AI is influencing not just assets but also cities. Cities with deep talent pools, strong economies, progressive policy makers, and creative workforces will likely be more resilient. As such, city selection remains a primary consideration in terms of long-term investment growth.

Read the full ‘Thought Leadership’ article at the link below