Beyond ChatGPT

This article originally appeared in the May 2024 edition of the Your Investment Property Magazine.

Artificial intelligence: you either embrace or fear our new robot overlords. But rather than spelling the end of civilisation (at least for now, it's early days) AI is simplifying and streamlining a lot of the more mundane day-to-day tasks.

According to Forbes, the most popular use cases for AI in 2024 are to write and respond to emails, craft social media posts, plan travel itineraries, and answer financial questions. But the use cases for AI extend far beyond that, especially in real estate, where it's transforming how buyers find, manage, and invest in properties.

From mundane tasks…

Leading the charge in property technology is Archistar, a property research platform which is already incorporating AI. Their AI Research Platform analyses over 25,000 data sources to pinpoint high-potential development sites, considering zoning, planning, environmental risks, and market trends - saving investors hours of research. Plus, their 3D Generative AI Design tool allows investors to generate hundreds of optimised building designs and even predict sunlight, ventilation and shadows, all before you break ground.

PropertySensor, another research platform, aims to integrate AI later this year. At the moment, users need to enter a postcode or a suburb to bring up information for that area. With AI, users will be able to ask a question about a suburb and instantly get a data-driven answer - similar to the way ChatGPT works.

"Instead of searching two postcodes and manually comparing council approval times, users will be able to ask 'does Carlton or Collingwood have longer council approval times?' which will return the times in a humanly readable response eg. 'the average council approval time in Carlton is 30 days, compared to 40 days for Collingwood'," PropertySensor co-founder Mark Wei told Your Investment Property Magazine.

Users could also ask questions like how many active property developments are in a certain suburb and how that compares to the expected population growth for that suburb.

Wei notes many small-scale property developers, especially mum and dad operations, rely on limited data or analytics, often choosing investment sites based on familiarity rather than broader market potential - meaning potentially more lucrative sites are being overlooked.

"Having this AI functionality will allow investors to access data in a digestible response that will aid all stages of property development projects, from site selection, margin calculations and risk quantification," he said.

The benefits of AI extend far beyond property research. Automation and machine learning are being used across all facets of the industry including property management. This is reducing the manual workload of managing properties by providing support to tenants, predicting what maintenance work will be required in advance, and automating routine tasks like screening tenants and collecting rent payments.

… to market predictions

The future holds even greater possibilities. AI could be harnessed to predict real estate market trends, potentially even forecasting bubbles or downturns.

PRD research analyst Yuki Yu, who is currently doing her masters degree with a focus on AI and data, says a subset of AI known as machine learning employs algorithms to discern patterns, regularities and trends from vast historical datasets.

"We believe that to some extent, AI can be utilised to predict future real estate bubbles or downturns," she told Your Investment Property Magazine.

"The real estate market is sensitive to various factors such as economic cycles, interest rates, policy changes, population movements, and supply and demand dynamics.

"AI can leverage advanced models like deep learning and neural networks to handle more complex data patterns, better capturing potential market trends and improving prediction accuracy and reliability."

But of course it's not quite as simple as that.

"Challenges arise due to the subjective nature of defining bubbles and downturns. Different individuals may have different interpretations of what constitutes a bubble or downturn," Ms Yu said.

"When facing unknown events such as the COVID-19 pandemic, AI cannot predict their occurrence in advance or their specific impact on the real estate market."

Consumer sentiment, driven by emotions, is another element AI struggles to predict or comprehend. The recent changes in housing preferences prompted by COVID exemplify this: Could AI have foreseen the shift towards regional living? Emotional responses to economic downturns significantly influence investment decisions. Despite continual advancements, it's challenging for AI to predict the myriad ways humans might - or might not - react to various scenarios.

Dax Stanley, author of Real Estate Investing with ChatGPT: Smarter Investments, Better Returns and founder of buyers agency Hera Property, believes AI could even tailor investment strategies by leveraging machine learning to analyse an investor's past decisions, financial goals and risk appetite - and then align them with current market opportunities.

"For instance, an AI system could recommend diversification strategies for risk-averse investors or identify high-growth opportunities for those seeking aggressive growth," he told Your Investment Property Magazine.

"By continuously learning from market outcomes and investor interactions, AI can refine its recommendations to meet individual investor goals over time better."

What's more, he says AI's ability to analyse and predict urban development trends could identify emerging hotspots before they become mainstream.

"As AI technology advances, we can expect to see a broadening of the landscape, offering novel and previously unexplored avenues for property investment," he said.

Collaborator, not competitor

The power of AI in real estate is undeniable. From market analysis to property management, AI is driving efficiency, cost savings and smarter investment decisions.

But a common concern remains: will AI take our jobs?

Fear of change isn't new. History is littered with examples of resistance to new technologies. Yet, these technologies often contribute to economic growth and create new jobs.

OpenAI, the US-based artificial intelligence research lab that created ChatGPT, estimates approximately 80% of jobs are exposed to AI advancements. But the true potential lies in AI as a collaborator, not a competitor. As Ms. Yu highlights, the key is achieving a balance.

"While AI is intended to augment rather than replace human labour, achieving this balance remains an ongoing challenge, necessitating retraining and upskilling initiatives for affected workers," Ms Yu said.

Microsoft CEO Satya Nadella says AI service providers are prioritising a human-centric approach by developing 'co-pilot' products that are designed to enhance human capabilities, rather than fully replace them. Microsoft has in fact developed its own AI aptly named 'Copilot' designed to be an everyday AI companion.

While AI excels at crunching vast amounts of data, PRD chief economist Dr Diaswati Mardiasmo points out it can't replicate the nuanced understanding and interpersonal skills of a real person.

"I truly don't think AI will ever fully replace the role of a real estate agent or data analyst - basically that human touch. At the end of the day, it is limited to on-screen or virtual processes," she told Your Investment Property Magazine.

"It still cannot drive you to potential investment sites and meet with a builder or developer, accompany you to do a 'look and touch' visit, or discuss with you personally your circumstances and choices."

So - AI won't steal your corner office (at least not yet). But it will become your tireless research assistant, sifting through mountains of data to identify trends and market opportunities, and make data-driven decisions that will put you ahead of the curve. Isn't that the ultimate edge every property investor craves?

_{Image created by Emma Duffy via Midjourney}