How Artificial Intelligence Will Cause a Real Estate Crisis. Are You Ready for It?

Right from the start, we have to be fair and admit one thing: the following lines are, to some extent, our speculation and prediction of market developments. However, when we rationally look at the pace of technological progress, we are deeply convinced that this scenario is, unfortunately, not far from reality at all.

Everywhere today we read about how artificial intelligence (AI) will make work more efficient, speed up processes and change the world. Few people, however, realize one massive secondary effect that this revolution will bring. Artificial intelligence will, in a relatively short time, radically disrupt the labor market — in a way that will most likely trigger a real estate crisis the likes of which we haven't seen in a long time.

Let's break it down and take a closer look at who is actually driving the real estate market upward today.

The Fall of the Modern "Nobility"

It is entirely clear that AI will, within a fairly short period of time, put a huge number of people out of work — or significantly reduce their income — people whose daily bread is working with computers. Coders, analysts, copywriters, administrative workers, and lower and middle management. These are exactly the types of positions that fill large cities and form the backbone of developed economies.

Until now, these people represented a strong middle and upper-middle class. One could say they were a kind of modern nobility of society.

They got used to high salaries, stable employment, constant demand for their skills, and wages that grew year after year. For this group, obtaining a large mortgage from a bank was absolutely no problem. Banks loved them. And although they were certainly not the only ones, their enormous purchasing power played a very significant role in driving property prices in major cities to astronomical heights.

The Spiral of Defaults for Which We Have No Cure

But the equation is relentless: without a job, there is simply nothing to repay with.

What happens when AI starts replacing these positions on a large scale? Financial cushions will quickly run out and people will be unable to service their expensive mortgages. At the same time, the other side of the coin also holds true: without stable employment and a high income, it is impossible to obtain a new mortgage. Demand for expensive apartments could thus collapse radically in a relatively short period of time.

We are entering a dangerous spiral of defaults — non-performing loans. A massive volume of distressed properties will begin flooding the market. Supply will rocket past demand and prices will plummet sharply. There will be no quick remedy for such a rapid shock. State apparatuses are enormous, slow-moving ships that are unable to respond flexibly enough to exponential technological change.

In time, of course, some remedy for this situation will be found and society will adapt to the new economic reality. The problem, however, is that today we do not know this solution at all, we are not systematically addressing it, and the inevitable transformation will take some time. And no, the illusion does not hold that all these people will simply find other employment, or that they will overnight become maintenance workers or plumbers. Not everyone can move into the manual labor sphere. Although artificial intelligence will undoubtedly also create some new jobs, the reality is relentless: it will permanently eliminate many times more positions.

The Old Approach to Investing Is Extremely Dangerous Today

This development shows us one fundamental thing: the old approach to real estate investing is extremely dangerous today. And it doesn't apply only to apartments.

The economy is a system of communicating vessels. Hotels can operate and generate profit for investors only when they have paying guests. Restaurants survive only if paying customers come regularly. Any production or service must ultimately have a real person at the end who has the money to buy its product.

If the middle class massively loses income due to AI, the purchasing power of the population will drop rapidly and the domino effect will impact all sectors. You cannot rely on rental or operational income if those who are supposed to pay you are losing their money. That is why it is critically important to change the approach to investing — and not only in real estate — today, and not to sit idly waiting for a massive disaster to strike.

We Don't Believe in the Myth of Endless Growth

This scenario smoothly brings us back to another one of our articles: Fluid Money: How Our Model Redefines Real Estate Investment Rules and Eliminates the Risk of Market Downturns, in which we clearly declared our seemingly paradoxical stance: Although at BizPartner Group we have been successfully doing business in real estate for many years, we do not believe in the myth of its endless price growth. Under the influence of the aforementioned technological and economic shocks, we rather expect a decline.

The majority of ordinary investors still apply the old, naive strategy: "Buy, hold and pray it goes up in the future." Being a long-term "holder" of ordinary real estate financed by debt is becoming an extremely vulnerable position today.

Our Recipe: Speed, Agility and Immunity to Market Swings

So how is it possible that at BizPartner Group our business operates stably and grows regardless of the mood on the market? The answer lies in our specific business model, which is extraordinarily resilient to crises of this kind.

We do not stand on passive waiting — our approach is completely different:

• High transaction frequency: Our model is built on volume and speed of transactions. We do not tie up capital in real estate for years on end — we continuously turn it over and grow it.

• No long-term holding: We do not accumulate a portfolio of "sitting assets" that would lose value in times of crisis. Our goal is to resolve the situation with a property quickly and return it to the market immediately.

• Returns independent of market performance: Our profits are not generated by the market as a whole growing artificially. We earn through our trading strategy, know-how, and the added value we bring to each transaction. Our model works equally well in a rising and a falling market.

• Lightning-fast response to change: Because we do not hold long-term, illiquid assets, we are able to adapt extraordinarily quickly. If AI truly triggers a crisis and prices start falling, we will not be paralyzed. We will have our hands free to seize the new opportunities that every market downturn brings.

In conclusion:

Artificial intelligence will soon rewrite the rules of the game not only in IT, but also in the real economy and real estate. Relying on old models and long-term asset holding could prove fatal in the near future. At BizPartner Group, we build on speed, turnover rate, and independence from market growth. And that is a strategy that will protect capital even in times of the greatest uncertainty.