CRE is well-known to count among the last adopters of AI. Yet, it could help the sector resolve many of its challenges. Let’s dive in and see, concretely, what are the concrete solutions offered to stakeholders in CRE.
At the core of CRE’s challenges lies a foundational flaw: dirty data. The industry has been grappling with an overreliance on outdated and often unclean data. Historical data, circulated for liquidity processes and decision-making, is riddled with errors, tricky to access, and duplicated across data fields. Relying on such flawed information, especially for property and portfolio valuation, results in costly inaccuracies.
The influx of digitisation has introduced algorithms and machine learning to expedite analyses. However, if the underlying information is flawed, predictive models and algorithms will only perpetuate inaccuracies more efficiently. While the answers may be delivered more quickly, the same errors persist, hindering the transformative potential of AI in real estate practices. Addressing these challenges upfront is pivotal for achieving long-term industry improvement.
Data integration is still the main issue
Data integration is a critical challenge for many firms in the commercial real estate sector, primarily due to the reliance on siloed data storage. To address this challenge, firms must evolve their approach. The task involves aggregating internal information encompassing market research, financial statements, rent toll, sale and lease terms, and more.
Adopting modern solutions like a data lake proves instrumental in overcoming these integration struggles. A data lake acts as a centralised repository that allows diverse sets of data to interact seamlessly, breaking down the barriers between siloed divisions.
A data lake to overcome data integration
By leveraging a data lake, real estate firms can create an environment where disparate data sources can speak to each other, allowing for more nuanced and useful insights to be generated. This integrated approach not only streamlines internal operations but also enhances the decision-making process by providing a comprehensive view of the data landscape. In an industry where timely and informed decisions are vital, overcoming data integration struggles becomes imperative for staying competitive and maximising the potential of artificial intelligence in commercial real estate. As the industry continues to evolve, embracing modern data integration practices will be essential for unlocking the full benefits of advanced technologies and gaining a competitive edge.
Adopting proactive policies toward technology
Real estate organisations often face challenges in fully integrating digital capabilities, limiting their competitive edge. The benefits of implementing digital strategies, including effective talent recruitment and streamlined compliance efforts, which expose the need for a proactive approach.
In the aftermath of the 2020 pandemic, the real estate industry recognised the necessity of embracing tech solutions before crisis calls for them. Initially, the technological adaptations from the pandemic were a survival tactic, allowing businesses to maintain ongoing capacities while transitioning to remote work. However, the significance of tech tools for rapidly improving capabilities during remote work became apparent.
For an early integration of AI
Prominent real estate organisations that embraced early integration of technology demonstrated its value in times of crisis. To adopt proactive policies towards technology, organisations should leverage their boards to drive greater long-term value and informed decision-making.
Forced to digitise amidst an economic downturn and a pandemic, the industry witnessed a change in mentality. EY’s poll revealed that 69% of commercial real estate owners now identify technology adoption as a high strategic priority, with 24% rating it a medium priority. This shows a key shift in CRE mindsets and a key learning: it is easiest to adopt technology solutions when you do not have to.
The adoption of a proactive mentality now involves addressing the lack of fully integrated, end-to-end solutions available. Integration, where company platforms seamlessly connect and share data, becomes the responsibility of those who embrace these technologies. This shift is critical for staying competitive and future-proofing operations. It’s now the time to jump right in and help your company overcome some of its challenges thanks to AI!
