Much has been written on the rise of AI and the benefits and risks of its relentless progress. The pace at which technology is surpassing human capabilities is astounding to witness. History will be kind to those who can leverage the potential of AI for the benefit of mankind.
As innovative AI tools begin to penetrate the CRE market, we are witnessing fast-paced growth in several aspects of housing development and financing. We at Builders Patch are already harnessing the potential of AI and using it to accelerate the housing finance process. However, we strongly believe that AI needs to be harnessed with sufficient human oversight. Human faculty will never become redundant, and will instead work in conjunction with technology to transform the CRE industry.
In this article, we’ll dive into how AI is transforming the CRE sector and how we are leveraging AI to bring unprecedented feature improvements to our users. In the final section, we touch upon the importance of deploying AI as a co-pilot for humans and how that can serve the industry better.
Applications of Artificial Intelligence in CRE
Financial modeling and intelligent insights
Every CFO has spent weeks perfecting a great financial model or template that works best for their organization. However, there is always an element of guessing involved in this process, which requires making assumptions and projecting for the future. This is the part of financial modeling that requires certain risk-taking on the part of the creator of the model.
The use of AI in this process is bringing down the risk element by allowing the user to make more accurate projections. The use of AI can tell you how good your assumptions are by crunching vast amounts of data and offering insights into the market. For example, you can train the AI tool with publicly available financial models, and it will be able to tell you if your assumptions are realistic. Overall, AI and machine learning has made modeling much simpler, with customizable inputs, data-driven predictions and generally producing more accurate projections for your organization.
Site selection, market analysis, and building design
Most developers will tell you that the process of selecting a site for your development project can be a struggle. A broad search is required for site selection and after, checking its eligibility to move the process forward. Big CRE firms usually have whole teams dedicated to just this one task. The capabilities of AI to analyze large volumes of data and scope the market makes it the ideal tool to simplify the cumbersome site selection problem.
CRE firms are using AI to perform a thorough market analysis that can offer them intelligent insights about where to develop their upcoming projects. Features such as demand/supply gap measurement, demographic analysis, and financial feasibility make AI programs a powerful tool in the site selection process. The combination of data from your past projects and forecasted data can help you identify profitable sites for your projects. By analyzing your expenditures at a portfolio level, you can draw insights into the financial health of your investments and accordingly make decisions for future site selection.
In the area of building design and construction, AI can help with predictive modeling, quality control of materials, integration with Building Information Modeling (BIM), and safety assessments, among others. Several architecture and construction firms have already deployed AI in their day-to-day operations.
Energy efficiency and decarbonization
In the United States, buildings represent 40% of the total energy consumption. This number is extremely high and negatively impacts the administration’s efforts to tackle the climate crisis. In order to better understand our energy consumption and manage it, AI is being deployed at the building scale.
With the use of AI-powered smart meters and weather data, households can receive real-time insights on how they can reduce their energy consumption and prevent wastage. This further translates to financial gains for these households since their energy bills will be much lower. Advanced metering infrastructure (AMI) can also support the mission of decarbonization by building a mechanism that reduces the carbon footprint of consumers. There are several other strategies for financing an inclusive energy transition but AI will be a key player in every step of the way towards our mission to decarbonize.
Predictive analytics in CRE
Did you know that the top financial risks for CRE investors include geographic market risk, tenant risk and finance/interest rate risk. According to a Deloitte report, these factors can limit growth and profitability for real estate institutional investors.
AI systems are capable of analyzing vast amounts of data to draw intelligent insights about the future. There is a vast amount of real estate data that is either publicly available or can be easily accessed for a price. Having this data at one’s disposal can prove to be valuable considering AI systems can analyze and forecast future market conditions, profitable areas of investment, etc. These insights can reduce risk for investors by offering accurate, data-driven assumptions.
Imagine you are a real estate investor, looking for an area of investment that could prove to be profitable in the next 10 years. With the help of AI, this process can be streamlined and made more accurate. You can start by using existing AI solutions to scope geographic locations where the market is currently doing well. You can then input data that matches your requirements and ask the system to show you the best investment areas. After analyzing the market data and understanding your needs, the system will use machine learning to give you options for potential investments and sites that are a good fit for your parameters.
Since much of the above is predictive analytics, accuracy is a strong requirement. While humans have been making these kinds of predictions for ages, with AI systems, the margin of error is much less.
How Builders Patch is leveraging AI
As a mission-driven organization that wishes to introduce cutting-edge technology to the housing industry, our goal has been to constantly improve our platform by harnessing the power of innovation. Alongside the rapid growth of AI, we have been innovating in-house to deploy powerful AI capabilities on our platform, that can make the lives of our users easier.
AI’s natural language processing (NLP) ability is one of its most powerful applications, which we have harnessed for our platform. Builders Patch can seamlessly capture data from structured and unstructured documents and can digitize those in neat categories on our platform. This has saved valuable time for our users, especially in the underwriting process, by eliminating the need for manual data entry. We are consistently training our AI system with the most relevant data, so it can complement the underwriting process for our users. The system, after analyzing vast amounts of data, will be easily able to flag discrepancies in financial statements or rental agreements for the underwriter.
We are also routinely using AI to consolidate and analyze data about the housing market, so we can bring our network the most updated housing data and insights. While that is all impressive, it isn’t the extent of it. We have big plans for our platform and how it can harness some of the more advanced capabilities of AI. We will keep bringing you news of our feature updates, as and when we release them, so stay tuned to our website for further updates!
AI will not replace human faculty - it’ll be a co-pilot for humans
With the rapid growth of AI and the launch of revolutionary tools such as ChatGPT, a renewed debate about AI has resurfaced in internet circles. These advanced AI capabilities have introduced fears of certain jobs being replaced by AI and the redundancy of human labour. However, many experts believe that AI can never fully replace the ingenuity of the human mind.
We at Builders Patch strongly believe that AI can never serve as a replacement for human faculties. Instead, we envision it as a complementary tool to humans, aiding and optimizing human faculty as it applies to the CRE industry. For example, no matter how powerful AI becomes, we will always rely on the vision of our team to ideate the integration of AI in our platform, by setting appropriate goals and defining parameters. Human oversight is the most important piece of AI deployment and that is why several experts believe that AI will never run on auto-pilot, but will rather serve as a co-pilot for humans.
While AI can automate a lot of manual tasks, which results in time and cost savings for the CRE industry, humans will be responsible in ensuring that the tools are serving the organization’s goals and furthering their impact. For example, while AI systems can spit out intelligent insights about the market, the responsibility to apply those insights and make strategic decisions will rest with the leadership team of the respective org.
We hope that in the coming days, we continue to strive to remove biases from AI and train it in a manner that is ethical. On our end, we will continue to harness the potential of AI and bring the most cutting-edge technology and its benefits to our users.
Image credits: Oleg Gapeenko via Vecteezy