AI awakening: Artificial intelligence is advancing, but are real estate companies ready?

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Around a third of Aotearoa New Zealand’s real estate professionals believe artificial intelligence will have a “revolutionary impact” on the property industry. But the same number again have not taken any steps to implement AI.

This is the key finding from the third instalment of the Yardi/Property Council NZ technology survey, an annual series that tracks the attitudes and practices of investors, fund managers, developers and consultancies, and offers deep insights into technology adoption.

The global AI market size was valued at nearly US$200 billion in 2023 and is projected to expand at a compound annual growth rate of 37.3% between now and 2030. However, not every real estate company is moving at an accelerated pace, the Yardi/Property Council NZ technology survey reveals.

The survey, completed voluntarily by 53 industry professionals in November 2023, found 29% of respondents hadn’t taken any steps to adopt AI and 66% thought real estate, in general, was lagging other sectors for technology adoption. Just over a quarter (27%) had begun implementing systems. Why is this?

Methodical moves

Julian Kezelman, Innovation Director at Taronga Ventures, Asia’s leading real estate technology investor, says there are various explanations for why New Zealand real estate companies are taking a wait-and-see-approach to AI. These reasons include “issues with data management, gaps in technical capability and a lack of clarity around key use cases”.

Julian suggests it is “sensible” for the sector to “wade into the possibilities of AI relatively slowly”. With a strategic approach, real estate companies can ensure they have the “building blocks in place” to determine the highest and best use cases for the technology.

Property law specialist and Partner at Wynn Williams, Jenna Adamson, agrees. “I’m inclined to think AI’s impact is more ‘evolutionary’ rather than ‘revolutionary’,” she says.

AI has “accelerated rapidly” – both the technology itself and the industry’s “awareness and appreciation,” Jenna says. “But, unless it’s in line with an organisation’s values or purpose, it’s not necessarily about being an early adopter or leader in this space and more about being a fast follower or smart adopter of the proven technologies.”

Sam Stewart, Manager – New Ventures at property and construction specialist Calder Stewart, isn’t concerned either. “Low adoption rates of tech represent an opportunity for New Zealand operators. If the market doesn’t intend to adopt these solutions, it could be a key point of differentiation for those who want to jump in wholeheartedly,” Sam observes.

The path to progress

The perceived impact that AI will have on the property sector varies depending on the vantage point. For instance, 63% of respondents from financial institutions see AI as revolutionary compared to only 18% of fund managers.

“The finance sector has been an early adopter of AI and automation for everything from fraud detection to customer service, and this could explain the optimistic attitude,” says Yardi’s Senior Director, Bernie Devine.

He suggests similar surveys in other markets show where the trendline is pointing. Yardi’s companion survey of Asian property professionals found 56% of respondents from Mainland China – where investment in generative AI has exploded – expect a “revolutionary impact” on real estate. In India, where tech companies are positioning the country as the largest pool of AI talent on the planet, a massive 67% expect radical change.

“AI will drive digitisation at speed, as it exposes data gaps and exacerbates pain points due to poor processes. Despite this a large proportion of the industry appears to be relying on old systems that are ill-equipped to meet new challenges,” Bernie says.

Yardi is already incorporating AI into its platforms. Yardi Rentcafe, for instance, features a chatbot that can communicate with prospective build-to-rent customers, do the legwork for leasing agents so they can spend more time forging human connections with qualified customers.

“While there is no question real estate companies must proceed with caution, most respondents to our survey acknowledged AI as a game-changer that can help them deliver better services and create better places for people,” Bernie notes.

Property Council New Zealand Chief Executive, Leonie Freeman has several “clear calls to action” for New Zealand’s property sector – chief among them the need for cyber vigilance and a strategy for artificial intelligence.

“It is tempting for leaders to be dazzled by exciting new developments like AI. But the findings from our latest survey suggest property companies should start with the basics. Without that right data foundation, the opportunities of AI may be elusive,” Ms Freeman concludes.

Looking for more?

For more insights, download Yardi’s Digital Transformation Report 2024.

Author | Bernie Devine

Regional Director, Asia Pacific, Yardi Systems

Bernie has over 30 years’ experience dedicated to real estate, technology, and leading digital transformation. He supports real estate clients with a range of assets, to use technology and best practice processes to grow their operations, create efficiencies, and gain better insight into their business. His expertise includes asset and investment management, private equity, operations improvement, program and project management, finance and compliance.

Bernie has led large-scale technology projects, as well as led and supported Proptech start-ups, across Australia, the USA, Middle East, Asia and Europe.

Bernie.Devine@Yardi.com

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