Smart technology has the power to redefine real estate investment. Already, asset owners all over the Asia Pacific region are building portfolio resilience through the adoption of pioneering AI.
Real estate has faced numerous pressures in recent times, including increased calls for decarbonisation. No longer is property a passive or uncomplicated investment; instead, the proactive integration of smart technology is becoming fundamental to the establishment of long-lived assets. With the built environment responsible for nearly 50% of global carbon emissions, the real assets sector has a significant opportunity and responsibility to accelerate the race to Net Zero.
Already, a portfolio's climate resilience is becoming increasingly important. For real estate, that means any steps that can be taken to improve the energy efficiency of a building should be taken as a matter of urgency, and so should buying into the digital economy. For those looking to proactively manage their assets, anything from investing in new amenities to changing building use can make a difference to rental value. However, AI is the single most effective measure investors can implement - and it is taking hold across the commercial and non-domestic markets.
AI Implementation in the Built Environment
AI has numerous applications in the built environment, but one of the most significant to note is that of HVAC optimisation. Of the 39% strictly energy related carbon emissions that buildings are responsible for, 28% come from operational emissions like heating, cooling, and electricity. Inefficient HVAC systems are therefore major contributors to a building's total carbon footprint. And, notably, a recent survey found that energy efficiency is the most important ESG consideration for real estate investors in the APAC region, with energy performance monitoring coming in just behind.
AI trained using Deep Reinforcement Learning exceeds the precedent set by other utilities optimisation methods, and can fulfil both of these ESG related goals. Legacy data or manual scheduling has been proven to be inefficient - responding to negative changes in conditions, rather than working predictively.
By contrast, AI that works with live data and uses no estimated averages processes data in real time to maintain an equilibrium of optimum settings. And this data is not just live; it's also varied, complex, and captured concurrently. From construction materials to pipework to HVAC device locations to local weather information, new generation technology enables a smarter overview of building thermal information. The result is AI that learns continuously, always improving the way it manages HVAC performance and defining the most efficient settings. That means reduced coolant, energy, and fuel consumption, and better occupant comfort.
For real asset investors, there are several key takeaways from this approach. Not only does smart AI technology offer a better occupant experience, but it also provides significant energy savings. It therefore has the potential to boost revenue and reduce energy bills simultaneously. At a time when energy comes at a premium and climate targets are on the agenda, many figures in the real asset industry are citing AI as the solution. In fact, AI can be deployed across HVAC infrastructure with no capital financial outlay - music to the ears of many seasoned property investors. A final thing to note is that there is a growing trend for decentralisation in the real assets sector, with the Central Business District (CBD) in many cities losing its primacy (though this is happening as a slightly slower pace in the APAC region). Nonetheless, it is clear that optimising the internal environment of your real estate asset is critical to retain occupancy and safeguard its market resilience.
AI has already been put to use in the Asia Pacific. Darul Ghufran has become the first smart mosque in Singapore following a ground-breaking decision to start a journey towards sustainability in 2019. The work was carried out by Arloid Automation, who centralised HVAC connectivity and finetuned the performance of the algorithm in line with mosque management and tenant feedback.
After only a month, this resulted in 12% energy savings, with 8,535 kWh saved after 3 continuous months of operation. Above all, the project demonstrated that using a building specific model means AI and clean tech can be put to good use in a broader spectrum of buildings than many might believe.
The Future of APAC Real Estate Investment
What does all this mean for Asia Pacific's real asset sector? Fundamentally, it means the digital economy is taking hold across the region, and smart technology is the single most effective way to safeguard asset longevity and performance. More than that, the adoption of AI has the potential to allow investors to not only navigate market changes and climactic shifts, but capitalise on them.
Sustainability is becoming increasingly integral to real estate decision making, and stimulating action amongst investors should be at the core of the climate agenda. The next generation of truly worthwhile real assets are going to be green, and property investors have the power to make a difference now.
Soon, the demand driving real estate will be for those companies who support the climate economy. Working together, smart tech innovators and visionary investors can build a green future for real estate within the Asia Pacific. It starts with AI.
To learn more about Arloid's work, see our website.