A prominent part of the artificial intelligence (AI) investment conversation is adoption. As reflected by recent bullishness among the Magnificent Seven and other AI-related stocks, corporate-level embrace of AI is increasing.
To date, financial services and healthcare, among others, have been among leading groups when it comes to AI usage rates. Investors shouldn’t overlook the positive effects artificial intelligence can have in the real estate space. That indicates funds such as the ALPS Active REIT ETF (REIT ) and the ALPS REIT Dividend Dogs ETF (RDOG ) could benefit from member firms boosting AI use.
The intersection of artificial intelligence and real estate is still in its infancy. But it’s one that could have profound implications for REIT and RDOG holdings. That could prove true across an array of real estate subgroups. For investors considering the ALPS ETFs as potential beneficiaries of elevated AI usage, it’s worth noting the disruptive technology is applicable to a variety of real estate investment trusts (REITs). That includes apartment and hotel landlords as well as commercial real estate firms.
AI Could Boost Real Estate Sector
New research by Morgan Stanley indicates AI solutions such as virtual assistants can accomplish tasks such as virtual showings and fulfilling maintenance requests. That could deliver significant cost savings for REITs.
“Such AI innovations could lead to $34 billion in efficiency gains for the real estate industry by 2030, according to Morgan Stanley Research, which analyzed tasks performed by 162 real estate investment trust (REIT) and commercial real estate (CRE) firms, with a combined $92 billion of labor costs and 525,00 employees,” according to the bank.
Morgan Stanley adds that REITs could automate as much as 37% of tasks that are currently labor-intensive. That could potentially deliver large reductions in labor expenses. Morgan Stanley cites examples of a self-storage REIT digitizing 85% of its tasks and a residential property manager paring staff 15% since 2021 with the help of AI. For REIT and RDOG holdings, there are added benefits to be accrued via AI.
“Today, the benefits of AI go beyond efficiencies in the labor force,” added Morgan Stanley. “Technology is also helping reduce infrastructure costs, through optimization of functions such as heating, ventilation and air conditioning; solar-power implementation; and energy-efficiency initiatives. AI has become a key tool for real estate firms and their clients to identify risks including cash flow stability, climate change, location, regulation, health and safety."
Morgan Stanley notes healthcare and hotel REITs are among the beneficiaries of added AI use. Those groups combine for about of 16% of REIT’s roster. That doesn’t include the ETF’s exposure to casino landlords.
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