The impact of technology: exciting, transformative, and complex

No matter how you measure the impact of technological change, the metrics rarely fail to impress. Whether it’s the potential for AI to save hundreds of hours of work per year, the shift toward mass electric vehicle adoption, the sheer scale of venture capital funding, or the ability of a few pioneering companies to drive stock market outperformance, the sector never lacks excitement. However, technology is not an end in itself. It’s already challenging enough to appreciate or forecast the direct effects of new technologies—taking into account second-order effects, such as those on real estate, adds even more complexity.

Our approach tackles this problem from three angles. First, we aim to understand the fundamental advances taking place. What do they enable? What forces are driving them forward? What behavioural changes do they elicit? Second, we examine the sectors benefiting from these advancements. What is the nature of their work, their longevity, their risks, and their opportunities? Third, we apply this knowledge to real estate markets, paying special attention to any real estate-specific technologies.

Within this framework, generative artificial intelligence currently stands out as the most significant development. It is a general-purpose technology that has already infiltrated the full spectrum of economic, sectoral, and real estate dynamics. Our research highlights that, according to some estimates, this technology could to deliver more than £400bn in economic value for the UK by 2030. It also underscores its role in a range of other aspects, from driving retail efficiencies, its unique demands on real estate and power infrastructure, and its potential for delivering better ESG outcomes through intelligent monitoring and optimisation of building energy systems.

Artificial intelligence is central to several of the UK’s economic success stories. As of mid-2024, venture capital funding for AI-powered drug discovery had reached £1.1bn—about double the amount raised in 2023. This influx of capital is leading to the growth of new companies, which in turn have fresh requirements for real estate and evolving ideas about the characteristics of the spaces they occupy. However, the impact of technology is not just about AI. For example, the UK has long been a significant player in the global gaming market, which is forecast to be worth $300bn by 2030. As these companies expand, they must balance proximity to industry, academia, fibre technology, latency, and power supply to optimise operations. In short, a more complex set of real estate criteria.  

Real estate is also a critical enabler of technological progress at a more fundamental level, because much of this progress relies on data centre infrastructure keeping pace with growing demands. Investors recognise this importance: in the first half of 2024, over £750m was invested in the UK’s data centre market (real estate transaction volumes) — more than five times the amount invested during the same period in 2023. Data centres also enjoy a symbiotic relationship with AI. While demand for data centre space has been fuelled by AI in recent years, AI is now being used to reduce the energy consumption of these power-intensive facilities. More broadly, our research shows that reducing or optimising energy usage is becoming critical for real estate of all types. Our survey of European property investors, representing £300bn of assets under management, found that 7 in 10 require energy usage data prior to the acquisition of an asset. 

Our research shows that rapid technological advances are driving change for society and the economy, as well as the role that real estate plays. To learn more, download a copy of our latest report, which summarises these findings from a wide range of real estate topics.