AI-supported applications are becoming increasingly important in transactions and are changing the role and tasks of those involved, writes Petter Made
In the past 15 years, we experienced a booming global economy. Efficient digital processes and the profitable use of technology were not necessarily a focal point and were put on the back burner by many market participants.
Now we have entered a new era – one characterised by the possibilities of artificial intelligence (AI). It is becoming an increasingly integral part of the corporate world. Every industry, including real estate and specifically transactions, is exploring its potential.
This exploration is marked by equal parts excitement and concern. People are curious about AI, but simultaneously apprehensive. Such feelings are understandable, given the noticeable changes in roles, tasks and schedules.
This is just the beginning: monotonous, repetitive tasks will increasingly be handled by AI, which can execute them more accurately and efficiently by reducing human error.
This shift creates new freedoms, saving businesses time and resources. However, it also requires employees at all levels to be trained with the necessary skills to be able to make the most of AI’s potential, leading to a mix of uncertainty and optimism.
AI already supports current approach to data handling
So, what is the current status quo in the industry? AI is already playing a crucial role in understanding and categorising vast amounts of data. In property transactions, AI’s application is evident in document processing and analysis during due diligence, for example.
AI-supported applications extract and structure relevant information from extensive volumes of documents, such as contracts, financial statements, and property data, into relevant categories.
This process is facilitated through automatic recognition and naming, saving time and improving accuracy by reducing the risk of human error. This is particularly reassuring in transactions involving thousands of documents, a number likely to increase with new developments like ESG requirements.
AI’s role extends to risk assessment, with machine learning models analysing historical transaction data, market trends, and other external factors. This analysis aids in identifying potential risks in property or asset transactions, enabling informed, strategic decision-making and risk minimisation strategies.
The importance of AI in data protection is evident in modern data rooms such as Drooms, where it supports the automatic redaction of sensitive information, such as personally identifiable information, thus protecting data confidentiality and ensuring GDPR compliance.
The balance between AI and the human element
Looking ahead, AI’s role in real asset transactions will become even more critical. A key challenge will be digitising analogue information, making it more accessible and fostering seamless collaboration. This will enhance the due diligence process, allowing easier access to documentation and enquiry into risks and opportunities within data rooms.
AI is already making transaction processes more efficient and secure and will continue to improve these aspects in the future, enhancing the overall experience for all involved. AI will become a critical partner, for instance in predictive analyses.
Despite the increased involvement of AI, the human element will continue to be indispensable in the future – after all, it is a ‘people business’.
It is crucial to regularly train AI systems with high-quality data sets and review and categorise their results – also in accordance with ethical standards. While AI can analyse data swiftly and effectively, presenting comprehensive findings that are relevant for due diligence, it cannot replace the nuanced judgment and expertise of human professionals.
A partnership between AI and humans, mirroring the necessary balance of diligence and speed in transactions, is not just desirable but essential.
To read the latest IPE Real Assets magazine click here.
