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AI disruption is dividing equity markets, creating a potential tailwind for real estate
Thought Leadership
AI disruption is dividing equity markets, creating a potential tailwind for real estate
By Samuel Sahn, Managing Partner and Portfolio Manager, Hazelview Investments
As AI disruption reshapes global markets, real estate is emerging as a resilient long-term investment anchored in physical assets, scarcity and essential infrastructure.
While geopolitical headlines have captured the market’s attention more recently, 2026 has also been marked by widespread AI disruption fears. As frontier labs like Anthropic have released more advanced AI tools and models, markets have begun to reprice the risk that certain businesses face as AI threatens their business model.
During the first quarter, this market trend had an outsized impact on technology stocks, however it has also affected other service-based businesses like insurance, wealth management and even private credit firms.
What happened next is the part worth paying attention to.
As capital fled AI-exposed equities, it moved — quietly but deliberately — into commercial real estate and other asset-heavy sectors perceived to be more immune from AI disruption. In the first quarter, global and U.S. REITs returned 1.3% and 4.8% respectively, while the S&P 500 fell -4.4%.
The AI immunity trade
This dynamic reflects a clear market preference for businesses with heavy physical assets, durable economic relevance and barriers to entry that no algorithm can replicate.
Utilities, energy and real estate are among the sectors that fit this description. The logic is not that businesses in these industries are technology-resistant — it is that they offer something AI genuinely cannot substitute.
Why REITs may be structurally resilient
Three key structural qualities make REITs uniquely resistant to fundamental AI displacement risk. All three are directly relevant to the people who build commercial real estate.
1. Contractual cash flows
REIT leases are long-term, with rent escalators and structural default protections baked in. As a result, a REIT operator’s rent roll is insulated from technology replacement risk.
2. Physical scarcity
AI can improve parts of the real estate value chain, but it cannot eliminate land constraints, power availability, zoning approvals, skilled trades or construction timelines.
3. Non-digital demand
Warehouses hold inventory. Data centres house servers. Multifamily REITs provide homes. These functions are physical by definition and cannot be digitized away.
AI still needs the built environment
The most direct story for the construction sector is not that AI cannot replace buildings. It is that AI actively requires them to be built.
Hyperscalers — Microsoft, Google, Amazon and their counterparts — are projected to spend over $660 billion USD on data centre infrastructure this year alone. That investment reflects a physical infrastructure buildout requiring poured concrete, high-voltage electrical systems, precision cooling, structural steel and millions of square feet of purpose-built space.
Someone has to build all of that.
Conversations about AI in construction often focus on automation risk: AI-assisted estimating, generative design tools and autonomous equipment. Some of these will change workflows, but construction management, skilled trades and site supervision require physical co-ordination, contextual judgment and on-the-ground problem-solving that remain genuinely difficult to automate.
What the AI immunity trade ultimately tells us is that investors have started pricing in AI disruption risk more than ever before. Companies whose value depends on physical assets that take years to construct cannot be replaced by a model update.
Key takeaway
Real estate’s value is increasingly tied to what AI cannot replicate: physical scarcity, durable demand and the infrastructure required to power the next phase of digital growth.
This article is for informational purposes only and does not constitute investment advice, a recommendation or a solicitation to buy or sell any security. The views expressed are those of the author as of the date of publication and are subject to change without notice.
Samuel Sahn is Managing Partner and Portfolio Manager at Hazelview Investments, a global real estate investment firm. He is co-author of “The AI Immunity Trade and REITs.”