Are Development and Acquisition Roles AI proof / future proof?
Hi all,
As a prospective MBA student targeting real estate, I was looking for thoughts from folks in the industry across both development and acquisitions and even AM as to whether they believe, in the medium to long term, the career path across various roles is AI proof relative to other white collar jobs (eg IB, consulting, etc)
I'd be curious to hear thoughts! From my laymen's / WSO creeper perspective, sounds like development would be constituted of skills that are certainly more future proof than others (soft skills, ambiguous problem solving without data, placating numerous stakeholders/politics, etc)
I'd assume on its face that acquisitions may be a little more "at risk" of being materially affected by rapid AI tool advancement, but again - curious to hear thoughts. Thanks all
Based on the most helpful WSO content, here are some insights regarding the future-proof nature of Development and Acquisition roles in the context of AI advancements:
Development Roles:
Acquisition Roles:
General Observations:
Conclusion:
For more detailed discussions and insights, you can refer to the following WSO threads: - https://www.wallstreetoasis.com/forum/private-equity/qa-ai-will-automat…</a">Q&A: AI will automate many roles in the IB/PE world - https://www.wallstreetoasis.com/forum/private-equity/qa-ai-will-automat…</a">Thoughts on acquisitions vs. development
These threads provide valuable perspectives from industry professionals on how AI is impacting various roles in real estate and finance.
Sources: Q&A: AI will automate many roles in the IB/PE world. A live Q&A with Arctic, who are recruiting finance professionals to help manage that change, Q&A: AI will automate many roles in the IB/PE world. A live Q&A with Arctic, who are recruiting finance professionals to help manage that change, Thoughts on acquisitions vs. development, Work at top AM -- AI will virtually kill of entry-level roles in AM over the next 5yrs, Learning curve in development
The irony
Amazing :)
There's no guarantee for anything in this world. Do what you love - you'll figure it out as you go.
Artificial intelligence is nowhere near the point where it'll be threatening jobs. Even the stuff that could maybe be automated, we're decades away from that happening. Certainly not for real estate or any other job which requires critical thinking skills.
AI is basically the tech industry pushing a fictitious narrative that will help boost their stock price and promise more "growth" to Wall Street, and it's being swallowed whole and without even a whisper of criticism or questioning by a complaisant media. It isn't going to "revolutionize" anything any time soon, and the major ethical and legal challenges the entire "industry" is going to face in the near future may kill it in the cradle anyway
I agree. I don't think it can entirely replace accounting, which should be the most binary and replaceable role in finance. I think it is a long way from being anything more than a tool that helps productivity. For example, I might use ChatGPT to give me a boiler-plate market summary, but then I modify it to capture/remove information as I see fit.
Other examples I think are hard to outsource to AI (in no particular order):
Purchasing a property: Will AI assign a value it feels is reasonable even if the price is above the other offers? Maybe my reputation in the market is that I close quickly and that wins the deal at a discount to other bids vs the AI generated purchase price.
Financing a deal: will AI optimize for returns and how does it manage risk? Maybe the returns look best with a higher-levered loan from a debt fund, but my group of investors for this specific deal prefer lower risk/lower leverage.
Construction/Renovation: We budgeted $1,000,000 for a common area renovation. Turns out moving certain plumbing is more costly than expected. How do we value-engineer to stay within budget but maintain the final aesthetic?
Accounting: I have three cash accounts on the balance sheet, each for a specific purpose, that all reconcile to one bank account. Will AI know why I have them separated out and when to debit/credit one of the specific accounts vs the other?
Determining a distribution for investors: This quarter we generated a ton of cash flow, but we might have to replace a roof next quarter so we should reserve funds from the distribution for that expense. Will AI anticipate that?
Real Estate Taxes: is it paid in advance or arrears, and does AI know how to properly book the expense? I receive an increase on assessed value - based on market information AI agrees with the assessed value. However, my tax consultant knows that the county awards appeals easily, and therefore we should appeal the increase.
I could go on, but these are a few things that came to mind that require a human to understand in order to make the appropriate decision. Will AI get to a level that automizes all of this? Maybe. Do I see it happening in the near future? No.
If you work for a big company and the majority of your role is gathering data/information to produce to someone else, you might be at more risk. If you are actually providing insight on the data/information then you're much safer.
Doubtful but you never know. Data isn’t easily available and often times has accuracy issues (look at the CRE sites on sales comps for instance) so a LLM aggregating from these databases will yield shitty outputs.
Also, this is still a relationship business. Can you imagine farmer JimBob feeling comfortable selling land to GPT-4? Is GPT-4 going to quarterback a development and interact with the GCs, engineers, architect, lawyers, and cities?
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