Why CRE Investment Management Has Been Slow To Adopt Generative AI

Presented by InvestNext

Propmodo Technology

By Franco Faraudo · October 21, 2024

Greetings,

This week, Propmodo Technology is diving into investment management with the support of our friends at InvestNext. Download their free whitepaper to see how top firms are adapting their strategies in the new environment and get actionable insights to help your firm raise capital more efficiently in H2 2024 and beyond.

Real estate investment managers have a lot to think about right now. Even as interest rates come back down, there is plenty of risk to consider. Florida’s emergence as “Wall Street South” faces renewed questions after Hurricane Milton ravaged its west coast, highlighting the challenges of living and working in a disaster-prone area. The escalating risks and rising insurance costs are a formidable challenge, but many firms remain committed to Florida. The financial toll of continued storm damage hasn’t been enough (so far) to outweigh Florida’s strong business climate.

Office real estate also still has a lot of headwinds, even though companies like Amazon are deciding to bring people back to the office. Toronto-based Slate Asset Management is the latest real estate investment firm to announce a shift away from traditional office spaces. Slate’s new strategy will instead focus on essential real estate like grocery, residential, and healthcare. This pivot reflects Slate’s focus on resilience and long-term growth, as the office market continues to struggle.

To help stay ahead of these risks investment managers are using new data sets to help them understand their exposure. Climate change models have been used by the most sophisticated firms for years but the increased accessibility of climate data has allowed even the smallest investor to consider the impact of climate change on their investments.

Foot traffic data has also been incorporated into many more investment theses. Some investors are even using foot traffic data to verify claims by property companies. Earlier this year activist investor Jonathan Litt called out the life science REIT Ventas for over reporting the utilization rates of the offices in its portfolio.

One of the cutting edge technologies that is still being tested by investment managers is Generative AI. While this exciting tech has a lot of possible applications, limitations like unstructured data and non-quantifiable attributes are slowing its adoption.

One thing that technology is enabling is the ability of medium sized funds to communicate with investors and raise new capital. With more money coming into real estate as more opportunities arise, small and medium sized syndicators are using technology to transform their business into full sized syndications.

Here are some of the most important stories around investment management technology.

Let’s go!

Presented by InvestNext

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That’s why InvestNext has compiled an exclusive analysis of the changing fundraising landscape.

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Bytes

Comply or die
A report shows that the majority of European investment managers plan on increasing their technology investment over the next few years to help them comply with growing regulatory demands.

One man’s bubble
Starwood Capital Group’s CEO Barry Sternlicht has predicted that real estate will benefit from the AI investment bubble bursting because it will drive more capital back into stable assets like buildings.

More Propmodo Technology

Propmodo Technology is edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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