“We are running the Innovation Scouting Report for the fourth year in a row, and the forecasts from the previous year confirm the Trend Radar. AI, big data analytics, and IoT are the leading trends in real estate and construction. However, these technologies must be no longer considered separately. They work together and mutually strengthen each other. This interaction means that technological progress continues accelerating,” comments Hanna Huber, Leader of Innovation Management at Drees & Sommer. “The personal judgement of humans remains of great importance. AI is the co-pilot and does not replace the human being. Also, there is still a lack of high-quality data. Therefore, AI application cases across all phases of the real estate life cycle are not used on a large scale, although they are becoming increasingly relevant.”

Developments in generative AI over the past year have led to a previously impossible level of interaction between the various technologies. Technologies such as the digital twin are losing importance when viewed in isolation but are gaining importance in synergy with AI. 

Digital twin technology continues to have a strong global market value of USD 9.9 billion and is projected to reach an average growth rate of 33% from 2024 to 2032. In addition to its conventional application as a generator of digital images of buildings and machines, the digital twin is also used in the production sector in combination with Omniverse, which is a real-time graphics collaboration platform developed by Nvidia. Growth is being driven by greater use in supply chain management and the increasing adoption of big data analytics, IoT, and cloud platforms. Combining these two technologies means accurate, reliable and optimised digital twins that offer even greater business benefits. For example, Nvidia has constructed a digital twin of the Earth to enhance predictions of natural disasters and enable appropriate measures to be initiated promptly. The already significant importance of the digital twin is expected to be overshadowed by its integration with AI.

Drees & Sommer's Trend Radar shows that quantum computing is an emerging field of research attracting increased interest. Even though the technology is not yet considered to be of high relevance, and is not yet widely used, quantum computing is seen with significant potential. In 2022, the market value reached USD 1.9 trillion and is expected to rise to USD 42.1 trillion by 2032. Quantum computing is more efficient than conventional computers at recognising and analysing complex patterns and relationships in large data sets. According to the Future Today Institute, quantum computing will have a significant impact within five years, particularly in cryptography, security, optimisation and simulation, machine learning, and artificial intelligence. 

Within a very short time, artificial intelligence has developed from a vision into a reality. This field of research has developed rapidly since the Dartmouth Conference back in the summer of 1956, when the term artificial intelligence (AI) was coined. Artificial Intelligence has experienced a strong surge in recent years, especially due to generative AI (GenAI). The market for generative AI in the real estate industry is set to grow significantly. According to forecasts, the global market size is expected to increase to USD 102.78 billion by 2032, growing at a compound annual rate of 11.2%.
Changes in the startup scene are also an important indicator of a range of developing trends. According to the annual analysis by the appliedAI Institute for Europe, there were about 6,300 AI startups in Europe in 2023, about 10.6% of which are classified as generative AI startups. These are scattered across the EU, but the majority of AI startups are based in Germany. Globally, about one-quarter of all AI startups are in the USA.

AI has a wide range of potential applications in the construction and real estate industry, with numerous opportunities that can significantly influence and advance the sector. The two biggest challenges are getting people to adapt and how companies deal with the changes that lie ahead. One example of this is AI-assisted planning and optimization, where AI technologies contribute to intelligent space design, energy efficiency and optimization of usage. AI technologies can also be used for tasks such as site analysis, tender management, and the analysis and predictive modeling of building services equipment. Another important application is the use of generative design in BIM models. AI enables reliable and cost-efficient designs to be developed by exploring thousands of potential design variants for buildings.

According to this year’s PMRE Monitor – a market study of AI – increasing efficiency and quality by reducing process costs is one of the biggest application opportunities for AI, closely followed by increasing data quality through automated data creation and AI-assisted data collection and optimising business processes through AI-based automation, vulnerability analysis and early warning systems. If one compares the various services provided by the construction and real estate industry, the PMRE Monitor currently sees the greatest AI potential in data and document management, and reporting. Accounting and building administration, valuation and finance, and strategic real estate management are also considered to be areas of great potential. Given the current high demand for monitoring of regulations, AI also offers a range of potential applications in ESG monitoring.