The Real Economy

Generative AI: Disruptive or flawed innovation for real estate?

Mar 14, 2023
Real estate The Real Economy

It's hard to imagine that ChatGPT, the artificial intelligence technology, was introduced only weeks ago. Users have wasted little time testing the limits of the technology.

While several AI-powered text generators exist, ChatGPT is perhaps the best known. The technology was launched in November 2022 by San Francisco-based OpenAI.

ChatGPT builds on generative pre-trained transformer architecture, which uses unsupervised machine learning to find patterns in a data set without being given labeled examples or explicit instructions.

The training process of generative AI involves powerful algorithms and advanced computer hardware, allowing the chatbot model to learn from vast amounts of data ingested from the internet, with the objective of generating informative communication.

Generative AI has a wide range of applications that will revolutionize the real estate industry. Already, AI-powered solutions are helping transform real estate organizations by:

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Streamlining workflows

Real estate organizations analyze large amounts of data, such as property listings, contracts and client information. Generative AI can help automate many of these manual processes and eliminate repetitive responsibilities, freeing up time for real estate professionals to focus on more important tasks.

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Improving decision-making

Real estate organizations can leverage AI to make data-driven decisions. AI algorithms can be trained on large amounts of real estate data to identify patterns and trends that can be used to inform investment decisions.

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Enhancing customer experience

Generative AI can help real estate organizations provide a better experience for their clients. For example, AI-powered chatbots can be used to provide quick and personalized responses to client inquiries.

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Reducing risks

Real estate transactions often involve large sums of money, making it important to minimize risks. Generative AI can help real estate organizations identify potential risks, such as fraud or technology gaps, early on.

Limitations emerge

As the use of generative AI spreads globally, so does widespread criticism of its potentially serious flaws. The technology is trained to absorb and learn from multiple sources, including unverified, unsourced and secondhand data, which creates a material risk of disinformation that may be incomplete, biased or wrong. Additionally, generative AI systems might not pick up on controversial or unethical nuances, and therefore could exacerbate the spread of misinformation and, in extreme cases, serve as potential weapons for deceit.

Regardless, the popularity of generative AI continues to grow. Intense demand for the technology has resulted in server bottlenecks that have affected user access during high-volume periods, which will hopefully be alleviated with the launch of subscription models.

A competitive market

Despite the risks, technology giants are betting heavily on generative AI. Microsoft deepened its relationship with OpenAI in January, with a multiyear investment valued at $10 billion that gave it a share of OpenAI’s future profits in exchange for the computing power of Microsoft’s Azure cloud network. In addition, Microsoft is integrating the technology into its Bing search engine.

OpenAI will have competitors, with Google as well as the Chinese search engine firm Baidu each preparing their own AI tool.

Generative AI is rapidly becoming a reality. According to Bloomberg Business, the AI market is projected to reach $422.37 billion by 2028. Most large technology companies have already boosted capital spending on generative AI through the incorporation of large language models into their cloud infrastructure. LLMs are used in systems such as generative AI and machine learning.

The takeaway

Generative AI further expands the AI landscape that includes predictive analytics, computer vision and machine learning. Swiftly moving toward the point of singularity, technology is transforming our reality as we know it—and while there is room for improvement and a need for oversight, we expect to see increased adoption across every sector of real estate as a key driver of the industry’s digital transformation.

RSM contributors

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