This is Part 5 of our 6 Part Practical AI Guide.
Artificial Intelligence (AI) is revolutionising commercial real estate (CRE), offering unprecedented opportunities for efficiency, cost savings, and data-driven decision-making. However, as with any transformative technology, the adoption of AI in CRE comes with its own set of risks. Landlords, investors, and property managers must be aware of these risks and take proactive steps to mitigate them.
We want to provide you with some insight around what we think the key risks are but not just leave you scared to adopt AI, but provide you with ways to mitigate these risks. Let's chat risk!
Data Privacy and Security
AI systems in commercial real estate rely heavily on large volumes of data, which often includes sensitive information about tenants, property details, and financial transactions. The more data that is collected and stored, the greater the risk of data breaches and privacy violations.
Mitigation Strategies
| Implement Robust Cybersecurity Measures |
Ensure that your AI systems are protected by strong cybersecurity protocols, including encryption, firewalls, and regular security audits. |
| Data Anonymisation |
Where possible, anonymise data to protect the privacy of individuals and reduce the risk of sensitive information being exposed. |
| Regular Training and Updates |
Conduct regular training sessions for employees on data security practices and keep your systems updated with the latest security patches. |
Bias and Fairness
AI algorithms are trained on data, and if the training data contains biases, the AI system can perpetuate and even amplify these biases, leading to unfair outcomes in a number of areas of commercial real estate such as tenant screening, rental pricing, and investment decisions.
Mitigation Strategies
| Diverse Data Sets |
Use diverse and representative data sets to train AI models, ensuring they reflect a wide range of scenarios and demographic |
| Regular Audits |
Conduct regular audits of AI systems to identify and correct biases. This includes reviewing the outcomes of AI-driven decisions and making necessary adjustments. |
| Transparent Algorithms |
Develop and use transparent AI algorithms where the decision-making process is clear and explainable. This helps in identifying and addressing biases effectively. |
Dependence and Reliability
As AI becomes more integrated into commercial real estate operations, there is a risk of over-reliance on AI systems. If these systems fail or produce inaccurate results, it can lead to significant operational disruptions and financial losses.
Mitigation Strategies
| Human Oversight |
Maintain a balance between AI and human judgment. Ensure that critical decisions are reviewed by experienced professionals who can provide context and insights that AI might miss. This is why we Re-Leased allows you to review the work of AI in all features that we develop around AI. Credia AI is a great example. |
| Redundancy and Backups |
Implement redundancy systems and regular backups to mitigate the impact of potential AI system failures |
| Continuous Monitoring |
Continuously monitor AI systems for performance and accuracy, and be prepared to intervene if issues arise. |
Regulatory Compliance
The use of AI in commercial real estate must comply with data protection regulations such as GDPR. Failure to comply with these regulations can result in legal and financial consequences.
Mitigation Strategies
| Stay Informed |
Keep abreast of current and evolving regulations related to AI and data usage in CRE. This includes data protection laws, fair housing regulations, and industry-specific guidelines |
| Compliance Framework |
Develop and implement a robust compliance framework that ensures all AI applications meet regulatory requirements. |
| Legal Consultation |
Regularly consult with legal experts to review AI practices and ensure compliance with all applicable laws and regulations. |
Ethical Considerations
The use of AI in commercial real estate raises ethical considerations, especially in areas such as tenant screening and investment decisions. We see this coming into play when our customers deal with their customers. It is important to ensure that AI systems are designed and used ethically, without discriminating against certain tenant groups or perpetuating biases.
Mitigation Strategies
| Ethical Guidelines |
Establish clear ethical guidelines for the use of AI in CRE, ensuring that technologies are used responsibly and respect tenant privacy. |
| Transparency and Communication |
Communicate transparently with tenants and stakeholders about how AI technologies are used and the benefits they provide. This helps build trust and mitigate concerns. |
| Balanced Approach |
Strive for a balanced approach that leverages AI to enhance human capabilities rather than replace jobs. Focus on using AI to automate repetitive tasks, allowing employees to focus on higher-value activities. |
Navigating the AI revolution requires a proactive approach that combines technology, human oversight, and a commitment to ethical practices. By doing so, the CRE industry can fully leverage the benefits of AI while minimising potential downsides, ensuring a future where technology enhances rather than hinders real estate operations. This is where Re-Leased is focused on when it comes to enabling our customers with AI. Check out our new AI features here.
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