Artificial intelligence: the real estate revolution
It is hard to avoid the recent news highlighting the potential for Artificial Intelligence (AI) to transform our lives in many ways. The scope for such change in the legal industry has been particularly well reported, and Kieran Ogilvie considers some legal and other areas in the real estate sector where AI could be a useful innovation.
Legal Property Due Diligence
In a property transaction, whether that is buying, leasing, or financing, a legal property due diligence exercise may be required to assess the potential risk to a client before committing to the transaction.
The potential for AI to be used to review and digest legal property DD documentation with speed and accuracy is clear. This could have application in the conveyancing sector, particularly in Guernsey where historic title documentation can be in French language, and often handwritten to a point where legibility becomes an issue for a human reader. In the hands of AI, however, these matters could be readily resolved.
AI may also be helpful in judging risk levels following a legal DD review, although many note that human support will remain important in helping clients understand and interpret what the legal risks mean.
Legal Property Document Production
It is also likely that AI will be a valuable resource when it comes to producing legal property documentation, whether that be a lease, construction contract, sale and purchase contract, or property security and finance documents, among many others.
The legal industry has for some time been using set industry forms of documentation where, for example, the Model Commercial Lease is a frequently used starting point in a lease negotiation in the UK. The potential for an AI platform to create a lease document using an industry set form, based on agreed commercial heads of terms, could be useful to both the legal profession and clients alike, as it will save time and reduce costs.
Further, when it comes to document analysis, an AI platform can expeditiously analyse a document to check that it accurately reflects the commercial terms and highlight any onerous or material obligations that stand out or do not conform to industry norms.
Again, however, a client may still want a human to explain the legal terminology and what it means for their matter in practice. There are also questions on the ability of AI to act on the same transaction – could one AI platform act in the best interests of both parties simultaneously?
Property Investment and Development
Beyond its application in the legal world, the potential uses for AI in the wider real estate sector should also be considered. A clear benefit is that AI platforms can analyse huge amounts of data much more quickly than a human.
This could streamline the property investment and development process, with investors more easily able to assess whether an investment is worth pursuing based on the available data.
That is not to say that AI is making the decisions on property investment for investors or developers, and much of the analysis will depend on the quality of the data available. However, at a high level, it can be said that AI is likely to provide a useful tool for making better informed decisions more quickly.
The Future
The potential for AI to revolutionise our professional lives has been well reported. Its impact will likely be seen across the real estate sector, including in legal professional services, real estate investment decisions, in property management and surveying services, as just a few examples.
The benefits of AI will turn on the quality of the data available and the extent human support and guidance remains required, but the case for AI to increase productivity, save time and reduce costs in the years to come is a compelling one.
An original version of this article first appeared in Business Brief, August 2023.
