At the intersection of research and development, venture capital and technology constitute an ecosystem that could spur new technologies and ultimately grow large businesses in Abu Dhabi.
Several major structural developments in the real estate market recent years provide a unique opportunity to generate and significantly improve the value of investments, while supporting concrete progress in idea generation, incubation and, ultimately, commercialization.
The first is a shift in the role from real asset owners to commercial operators. Today, we don’t just manage a physical space: we provide all the services related to that space and help run the entire operation.
To achieve this, in making good decisions, one must have a considerable amount of information. By leveraging new technologies and AI, we can improve the decision-making process. In the past, these tools were only used selectively, but now all asset classes are seeing this shift.
Abu Dhabi’s next chapter of growth
The second major transformation is the transition from a carbonized world to a decarbonized world. Globally, this is a crucial development, although it is occurring at varying rates in different parts of the world.
We can all see the scale of climate change’s impact on the planet, through the increasing prevalence of fires, floods and other natural disasters. There is also a clear economic effect on the preservation and value creation of physical assets.
Our goal is to preserve and enhance these assets to avoid a reduction in their value, which is why we are actively seeking solutions to mitigate climate change.
The third trend is a growing convergence between real estatedigital infrastructure and energy infrastructure. As investors, we need to be able to consider these three asset classes together.
Data centers are a very current example. Providing the physical space and IT systems, as well as the fiber optic and power infrastructure attached to this center, are all needed at the same time.
The new generation of residential and other properties could become net energy producers. By integrating energy production within the asset, its own needs are met while also creating additional energy that can be used.
This convergence, combined with new technologies aimed at increasing asset value, will be absolutely essential. Improving a business on the sidelines will not produce lasting results.
If companies fail to improve their operations by adopting and developing new technologies, they will go out of business – disrupted by competitors who do so.
These long-term trends supported our vision behind our global initiative Real assetswhich recently inaugurated its latest innovation laboratory in Abu Dhabi.
The center will research, develop and invest in technologies aimed at accelerating progress in the real assets sector.
The importance of a forward-thinking ecosystem
Artificial intelligence (AI) and, more importantly, the ecosystem around new technologies show that we are arguably in the midst of the most important revolutions of the last 500 years, which could also be the most important revolution of the next 1,000 years.
We are focused on modernizing the real estate sectortraditionally little known as fast thinking, through our innovation laboratories, exploiting the younger generation.
They are motivated and engaged, they understand the lab, they propose use cases and generate ideas. We need more people who understand the value of all of this and who will lead the future of new technology development.
We are already seeing some very promising work that could have dramatic results in the real world. For example, a PhD student at University College London is developing a multi-model diffusion neural network to process a wide range of building data to address embodied carbon footprints.
Embodied carbon is arguably the most complex environmental problem. This is the most important component of broadcasts and is very difficult to define because it can manifest itself in all parts of the production.
This work has already been published, and if it is possible to find the intersection of all this data and process it to ensure the results are accurate, it could be a game changer.
The RealAssetX initiative will allow us to be smart about seeing trends. Another University of Chicago innovation lab project aims to predict rent growth in four major U.S. cities.
For the first time, we have developed machine learning to process data such as automobile mobility, credit card transactions, social security data, etc., to understand how to predict the direction of this market.
Abu Dhabi is a good example of how we could do this. Some types of real estate, like housing and office space, are oversupplied, while others, like affordable housing, are completely undersupplied.
Understanding gentrification patterns would allow market regulators to make better decisions, such as limiting some supply and development or directing it to other areas of the emirate.
The result
At the intersection of three very strategic partnerships – research and development, venture capital and technology – lies an ecosystem that could pilot new technologies and ultimately grow large businesses in Abu Dhabi and then export them to the rest of the world.
Incubating great ideas and then connecting those partners to the venture capital system will allow us to invest in some of the companies we’re going to start here – that’s the final catalyst for what we can achieve.
A clear sign of success for this initiative would be to launch a business in Abu Dhabi that reaches such a size that it would be recognized and used by multinationals and other large companies. This will mean we had the right idea and executed it perfectly.
Mohammed Abdoulmalek is responsible for the Middle East at PGIM.
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The information contained herein is provided by PGIM, the principal asset management business of Prudential Financial, Inc. (PFI), and a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc.