More and more Artificial Intelligence (AI) and related technologies form part of the ongoing discussion on the future of work, often leading towards the disruptions that these technologies may cause that could end in a dystopian future. The reality of the matter could be somewhat different...
Today, due to firm global growth, occupier and investor property markets in Asia are in a healthy state. Companies are looking towards AI and automation, but these may be long-run threats to the demand for space, instead, they should act to support high-value human roles and help in driving greater productivity.
Investment capital will migrate toward sources of human talent, e.g. university cities; and in combination, AI, the Internet of Things, and alternative workplace solutions will transform offices and building management.
The office of the future will use space more efficiently, have more collaborative areas, be healthier and feature more highly trained staff. In many markets, high rents and poor infrastructure threaten property markets more than AI and automation.
What is artificial intelligence?
According to a standard definition, artificial intelligence (AI) is "the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages". This definition is useful for two reasons. Firstly, it emphasises the range of activities AI can perform. And secondly, it makes clear that AI encompasses computer programmes and software applications, not simply the walking and talking robots of popular imagination (although such robots are now being designed and built).
However, AI can be used in a broader sense. According to some experts, AI is best understood as the platform underlying 10-12 emerging technologies, including mobile internet, the Internet of Things (IoT), advanced robotics and autonomous vehicles. These technologies employ either automated logic and reasoning, or largescale processing of data. All of them have the potential to disrupt established industries and traditional human working practices, however, they might not take over human roles just yet.
AI will complement human roles rather than replace them
Increasing automation certainly has the potential to replace human roles. It is natural for speculation about the scope for such replacement to be rife in places like India, where the technology sector accounts for about 60% of gross office absorption, due in large part to a steady growth in the number of IT/BPM (information technology/business process management) staff.
We have examined some of the sectors and roles most vulnerable to replacement by automated processes. The sectors include manufacturing, retailing, real estate, technology, commercial banks and insurance. The roles most vulnerable to replacement are those involving routine, replicable tasks. We highlight telemarketers, secretaries, basic accounting functions, real estate agents and paralegals (see Figures below).
Implications of increasing automation and shift to alternative workplace solutions for office design
Activity-based workplaces use space more efficiently. Efficiency may be lower in agile working environments, but this is mitigated by higher workplace occupancy.
- This suggests office size will shrink, or at least area per person will shrink.
- Much more space will be devoted to shared and collaborative uses. “Wellness” strategies and IoT will make the office far greener and healthier.
- Staff will be better trained, have specialist skills, and be mobile both within and outside work.
Impact of AI on real estate in Asia
- The impact of AI will be felt increasingly over the next decade. Routine roles such as simple call centre operators will be replaced first by AI.
- Low visibility over future headcount needs will drive demand for flexible working space.
- Companies will need to invest substantially in increasing the skills of their workforce.
- We expect the needs of large occupiers to revolve around intelligent buildings and office spaces equipped with advanced technology.
- Developers should be proactive and start to adopt such designs now. More modern buildings will command premium rents.
- Developers should build a varied portfolio of buildings catering to occupiers not only in primary business districts but also in secondary or peripheral areas with lower rents.
Key implications of AI for real estate
Colliers International has carried out extensive research on the future of the workplace, through our global Workplace Solutions teams and our Asian Project Management team as well as our Research Department. Based on our research, it seems reasonable to make the following general predictions about the implications for real estate of increasing automation and adoption of AI:
- Urbanisation will accelerate as jobs are replaced in manufacturing and agriculture
- The Internet of Things will transform buildings and building management
- Offices and industrial units are likely to become smaller, or at least more efficient
- Investment capital will migrate toward sources of human talent, notably university cities
- Technology, media and creative industries will become key sources of demand for new space
- Boundaries will blur between different categories of property, and there will be a shift towards mixed-use buildings
- Demand for dynamically managed logistics warehouses will strengthen