Institutional investors in the real estate sector seem generally optimistic about the future of Artificial Intelligence within the sector.
A new report has found that two thirds of institutional investors expect Artificial Intelligence (AI) to be widely adopted in the real estate sector by 2022.
The report, commissioned by Intertrust, weighed the likelihood of adoption and likely impact of AI within the real estate space by surveying institutional investors. 42 per cent of those surveyed see AI having an impact sooner even than 2022, with widespread adoption expected by 2020.
Real estate investment has often been depicted as a poor fit for fintech solutions. The importance of the underlying asset, and the need for physical inspection, makes property less naturally suited to digitisation than, say, loans to small businesses or consumers. For further reading on this, see Fintex Capital CEO Robert Stafler’s AltFi column on 'the tension between digital innovation and manual underwriting'.
That tension is represented in the Intertrust survey’s finding that 33 per cent of institutional investors believe AI technology is not yet ready for use in real estate. Having said that, the same proportion again believe that this is due to a lack of investment in AI within the sector.
“The use of AI in the industry has become an increasingly hot topic, with many predicting that it will fundamentally transform real estate investment within two to three years,” said Jon Barratt, head of real estate at Intertrust.
“With well-established business models, the real estate investment industry can at times seem slow to adapt to new innovations. However once early adopters prove the investment case, we may see the majority of players in the industry quickly follow suit.”
The Intertrust report highlighted performance measurement, cost savings and reduction of time consuming and low skill tasks as possible benefits of AI. On the possibility of job losses, the average prediction from investors was that 12.8 per cent of front and back office jobs could be at risk within two years. However, 20 per cent of respondents saw no threat to jobs whatsoever.
Crucially, 34 per cent of respondents said that AI will improve property investors’ decision-making – arguably the key factor in determining adoption of the technology in the future.
AltFi is running its inaugural Alternative Property Forum on June 19th. You can register your interest in attending the event here.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.