New risk-management considerations for the real estate industry in the era of artificial intelligence

Journals

Title：
New risk-management considerations for the real estate industry in the era of artificial intelligence
Author：
Olga Koroleva¹, Lawrence A. Souza²
Author Affiliation：
1. Capital Brain, Guerneville, USA
2. Menlo College, Atherton, USA
Received：Oct.7, 2023
Accepted：Nov.15, 2023
Published：Nov.28, 2023

Abstract

Objective - The goal of this paper is to present a blueprint for real estate investment companies for novel risk considerations due to the rise of use of Artificial Intelligence applications. Background - New technologies (especially Artificial Intelligence) are rapidly changing how investors, tenants and managers use, invest, and finance property. These technologies are introducing revolutionary change for the industry in terms of organizational structures and a novel set of risk considerations that managers within real estate investment companies need to consider. Methodology/approach - This qualitative approach is based on the impact of technology on risk management policies and organizational structures as reviewed in real estate industry and academic literature, professional experience, and current PropTech applications. Findings - The revolution in real estate technologization will not come from the application of new technologies but the rapid change in management leadership style and culture while addressing a new set of risks introduced by these technologies. Conclusion - Due to the current state of the economy, effects of the pandemic, and rapid adoption of new technologies, real estate companies are likely to radically change the way they are organized, how they innovate and manage technology risks, and how they are led by management. The paper underscores the need for real estate firms to create comprehensive restructuring plans to operate like technology firms and to emphasize the development of self-leadership and communication skills in the workforce. It is important for companies to address the array of risks associated with AI integration – loss of jobs, ROI uncertainty, technical challenges, dependency on AI – by exercising a nuanced approach, tailored to the unique needs and circumstances of each organization. The development and implementation of solutions should be a collaborative effort, drawing input from multiple stakeholders within the organization.

Keywords

Real estate investment, artificial intelligence, leadership, technology, proptech, machine learning, organizational design, strategic planning.

Doi

https://doi.org/10.58396/gsef010202

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