Much of the attention around generative artificial intelligence (AI) has focused on its transformative potential.

For the real estate sector, however, the analytical prowess of AI and its ability to unearth new avenues of demand for space are what’s sparking interest.

“AI has enormous potential to reshape real estate, with near- and long-term impacts ranging from the emergence of new markets and asset types to innovations in investment and revenue models,” says Yuehan Wang, Global Research Associate, Real Estate Technology, JLL.

“A rapidly expanding AI ecosystem and its supporting infrastructure will drive new demand for real estate in different markets globally,” she says.

Expectations are running high among investors, developers, and occupiers surveyed by JLL, who believe AI and generative AI will be among the top three technologies to have the greatest impact on real estate over the next three years.

Here are the top five areas where demand is emerging on the back of AI’s rapid development.

The need for specialized skillsets will only rise with the advent of AI. The war for talent is already driving decision-making for AI companies and investors on where best to establish operations.

Companies have been sprouting up in established markets, often within major technology hubs and in close proximity to top academic institutions, to tap into the technology ecosystem and a ready crop of AI engineers and technical talent.

Take ChatGPT developer OpenAI, which recently announced London as its first international hub to develop AI technology and policies.

In Taiwan, contract electronics manufacturer Wistron built a new plant for AI, 5G, server and computing products in an AI-focused business park in Hsinchu, the city’s main tech hub and home to the world’s top chipmakers.

Meanwhile, other markets are using the same playbook to attract investors. In Shanghai, the municipal government is building an AI cluster as part of a three-year plan to increase its production output by 28% to 1.8 trillion yuan (US$251 billion).

The massive data processing and storage needs for AI has thrusted data center development into the spotlight.

“As generative AI technology becomes more seamlessly integrated into our everyday lives, the appetite for data will inevitably increase,” says Christopher Street, Managing Director of Data Centers, Asia Pacific, JLL.

Globally, the number of hyperscale sites in development is expected to double by 2024, up from 500 sites just five years ago, JLL data shows.

“We’ve seen a substantial increase in the size of campus builds, with constructions exceeding 100 megawatts becoming commonplace, compared to the past when a 20-megawatt requirement was considered large,” Street says.

These newbuilds are also getting greener as operators come under pressure to address the environmental impact of these facilities. This is driving a stronger emphasis on sustainability and energy efficiency through improvements in technology and the adoption of renewable energy in these facilities, according to Street.

AI is increasingly being deployed to accelerate the pace of transactions and unlock detailed analytics of properties and markets for investors.

The ability of AI to scan data and find meaningful patterns at speed means it can offer valuable recommendations aligned with an investor's objectives, risk tolerance, and market conditions.

An example is JLL’s Capital Markets Quants platform powered by AI and machine learning. By analyzing data from over 1.25 million properties transacted globally in the past 20 years, the platform predicts real estate shifts and opportunities that support advisors in optimizing their clients’ portfolio strategies.

Co-working operators are also finding new revenue streams from AI. Data collected and analyzed by AI algorithms can help predict future space demand to optimize energy usage and plan space utilization more effectively, which potentially opens new doors for expansion.