Generative AI Governance: A Toolkit for Commercial Real Estate Leaders

Generative AI is poised to revolutionise industries worldwide, and the UK real estate sector is no exception. As a leader in this sector, you have a critical role in leveraging AI to enhance operational efficiency, customer experience, and overall business growth. However, the deployment of AI technologies must be accompanied by robust governance frameworks to ensure ethical, transparent, and responsible use.

This white paper is part of a toolkit developed by PTS to help the UK real estate market implement effective AI governance. It provides insights into best practices, ethical considerations, and practical steps tailored specifically for the real estate sector.

AI governance is essential for navigating the complexities of AI adoption. It provides ethical and accountability guardrails that organisations can rely on to make decisions aligned with their AI adoption goals. In the commercial real estate (CRE) sector, AI governance helps mitigate risks associated with data privacy, bias, and compliance, ultimately fostering trust among stakeholders.

AI governance is not just about ensuring one-time compliance; it’s about sustaining standards over time. As technology evolves, organisations must safeguard against financial, legal, and reputational damage to maintain quality and reliability.

To ensure the ethical and effective use of AI, CRE organisations should consider adopting a set of design principles. These principles guide decision-making throughout projects, unifying collaborators around what is most important to the business.

• Ensure a Clear Design Focus: Adopt a human-centric approach where the well-being of individuals is a primary concern. Design AI systems that augment rather than replace human capabilities. Alternatively, focus on solution-oriented approaches that streamline customer interactions, property management, and decision-making processes.
• Have a Clear Purpose: Define specific objectives for AI deployment, such as improving property valuations, enhancing tenant experiences, or optimising energy efficiency in buildings. Ensure that AI initiatives align with your organisation’s values and long-term goals.
• Respect Safety & Compliance: Implement robust safety measures to mitigate potential risks associated with AI, such as inaccurate property valuations or biased tenant screening processes. Regularly update and audit AI systems to ensure they operate reliably and safely. Establish mechanisms to identify and address biases, errors, and unintended consequences.
• Secure Data: Safeguard personal data by implementing strong data protection protocols and complying with GDPR and other relevant regulations. Ensure transparency in AI-driven decisions, allowing stakeholders to understand how their data is used. Protect AI systems from unauthorized access and cyber threats by implementing advanced security measures to maintain data integrity and confidentiality.

• Establish an AI Centre of Excellence (CoE): Form a multidisciplinary team including executive leaders, IT and cybersecurity experts, legal and compliance officers, and representatives from key business units. Define the CoE’s scope, responsibilities, and objectives to ensure alignment with organisational goals.
• Develop Comprehensive AI Policies and Procedures: Create policies covering data privacy, bias prevention, and ethical AI use. Regularly review and update these policies to keep pace with technological advancements and regulatory changes.
• Conduct Regular Risk Assessments: Identify potential risks related to AI adoption, such as data breaches, biased algorithms, and compliance issues. Implement mitigation strategies, such as rigorous data anonymisation, diverse training datasets, and continuous monitoring of AI systems.
• Implement Continuous Auditing and Monitoring: Set up processes for regular audits to identify and rectify biases and errors in AI systems. Use performance metrics to evaluate AI applications, ensuring they meet accuracy, reliability, and fairness standards.
• Foster Transparency and Stakeholder Engagement: Communicate clearly about AI initiatives, including data usage and decision-making processes. Engage with stakeholders, including tenants, property owners, and regulatory bodies, to build trust and ensure alignment with their expectations.
• Provide Training and Education: Ensure that all employees involved in AI strategy, development, and deployment receive training on the ethical and responsible use of AI. Promote AI literacy across the organisation to foster a culture of responsible AI use.

Effective AI governance can lead to significant benefits for UK real estate firms:

Enhanced Operational Efficiency: AI can automate routine tasks, such as property maintenance scheduling and tenant communication, freeing up staff to focus on higher-value activities.

Improved Customer Experience: Personalised AI-driven services can enhance tenant satisfaction and retention.

Risk Mitigation: Robust governance frameworks help avoid costly legal and regulatory issues by ensuring compliance and ethical use of AI.

Competitive Advantage: Firms that implement strong AI governance can differentiate themselves by showing a commitment to responsible innovation.

Use-cases typically fall into two categories: improving the customer/occupier experience and journey (enhancing sales, marketing, investor relations, and support functions) and improving asset management and operations (using property-level data for forecasting, budgeting, and strategic planning).

AI can optimise office space utilisation by analysing occupancy data and usage patterns, helping companies adjust office layouts to better suit employee needs, support hybrid work models, and reduce costs.

While the potential benefits of AI in real estate are substantial, several challenges remain:

• Regulatory Compliance: Staying abreast of evolving regulations and ensuring AI applications comply with legal standards.
• Bias and Fairness: Continuously monitoring AI systems to detect and mitigate biases that may arise from historical data.
• Ethical Considerations: Ensuring AI use aligns with ethical standards and societal values.

Navigating these challenges requires ongoing effort and collaboration across the organisation, guided by a commitment to responsible AI use.

Generative AI offers transformative potential for the real estate sector, but its adoption must be guided by robust governance frameworks. By adhering to best practices and ethical principles, real estate firms can harness the power of AI to drive growth, enhance efficiency, and build trust with stakeholders.