The Disruption of Generative AI in Real Asset Markets: Insights from Chongyu Wang, Jingfang Wang, and Tingyu Zhou Using CompStak Data

At CompStak, we are excited to see how emerging technologies like generative AI are influencing the commercial real estate landscape.

“The Disruption of Generative AI in Real Asset Markets” by Chongyu Wang, Jingfang Wang, and Tingyu Zhou explores how generative AI is transforming real asset markets, particularly in real estate, by enhancing data analysis, property valuation, and investment strategies.

The full abstract of the paper can be found below, offering a glimpse into the depth of research that leverages the precision and accuracy of CompStak data to assess market changes.

“This study examines the impact of Generative Artificial Intelligence (AI) on the commercial real estate (CRE) valuation by analyzing both private rental market transactions and public stock market reactions. By constructing novel measures of tenants’ exposure to Generative AI, our lease analysis reveals that increased Generative AI exposure leads to lower rents and shorter lease terms, mainly in the office and industrial sectors, following the release of ChatGPT. Utilizing a unique dataset linking tenants, commercial properties, and CRE firms, our public market analysis provides results consistent with those of the lease analysis. Higher Generative AI exposure leads to reduced market returns for CRE firms, highlighting market concerns about the future performance of heavily exposed firms. Portfolio analysis shows a considerable cumulative return from a strategy that longs low-exposure CRE firms and shorts high-exposure CRE firms. Our findings contribute to the literature on AI-driven labor displacement, suggesting a decreased demand for CRE spaces in core property types. However, our heterogeneity tests reveal varied effects, highlighting the need for future research to consider granular data and long-term impacts to refine our understanding of AI’s influence on CRE.”

Download the full paper here.