Artificial Intelligence and Proptech
Property, like most industries today, is set to be transformed as part of what is being referred to as 4IR (The Fourth Industrial Revolution)
This change will affect the various business verticals of the property industry in different ways. Bringing new technology such as improved seller/buyer matching to real estate agents, smart building technology to property managers, insightful analytics to investors and automation to builders.
In this article, I look at some of the real technologies that are currently being implemented and their potential impact on the property industry as well as people’s jobs and how they might change.
This introductory article briefly covers the main sectors and how they are changing. Over the coming weeks, I will take a deeper look into each sector. The purpose of these articles is to understand the impact of AI on the operations of property businesses and where the most benefits can be derived for those businesses.
Real Estate
High Street Estate Agents face a battle to remain competitive against the online agents. The reduced cost models of online agents is compelling. However, the personal and often insightful assistance of the human agent is still an important factor in getting the sale done. James Dearsley, industry guru, has pitted the 2 option against each other in his quest to sell his flat.
Can AI really be used as a tool to help the Human Agent fight back? It seems somewhat counterintuitive but in reality, working alongside an AI assistant may be the future for the high street agencies. No matter the knowledge and experience of the agent they will never have the capabilities of a machine to digest huge amounts of data, retain it, assess and derive patterns from that data. Take for example Houseprice.ai — they claim that their “Root Mean Square Error (RMSE) model is an industry-leading 2.6%, meaning our middlemost projected price is just 2.6% from the actual sales price”.
Using Machine Learning and Pattern Recognition it is also very likely we can augment the innate knowledge of the agents with the insightful matching of buyers with properties. In 2016 an experiment was run in Denver, pitting a bot against the agent for picking homes for buyers. The bot won.
Combine this kind of information with good sales skills and the new tech-savvy high street agency becomes a future-proofed institution, making the most of well trained, helpful and attentive sales staff. Agents armed with huge amounts of accurate information delivered to them in a timely manner with their AI assistants working in the background is a very likely short-term future scenario.
Combine this with the latest developments in Virtual and Augmented Reality, potentially making viewings instant and tailored to the needs of the buyer. Then provide the agent with the latest gadgets, such as mobile technology, smart glasses, wearables etc and the need for the costs associated with the high street office become less important, as we move to a world where the best agents thrive on their ability to use the data effectively to their advantage and their ability to create relationships (still a very long way off for AI) that turn into sales.
Investors & Developers
Financial investing is an industry built on data, modeling and analytics. However, property investment has traditionally used tools such as Excel or applications such as Argus to manage their investments. These simple modeling techniques are overshadowed by the complex analytics adopted by the financial investors. Now with the ubiquity of AI tools deeper and more complex investment models can be created by property investors.
Does this mean they can leave robots to decide where to put their money? No — because while it is called Artificial Intelligence what it really lacks is true intelligence. This is still the domain of humans and, no matter the hype will still be for some time. Products such as REalyse offer investors insights into trends dating back to 1995, helping them to be more efficient in identifying investment opportunities, including rental and sales values, yields and demographic data.
Right now AI has not made much progress to this effect and maybe it is one area where the value of AI may not be realized. AI is yet to prove itself as a reliable investment tool for financial market investments; emulating Warren Buffet’s investment strategies has proved elusive to AI technologies. As Carl Icahn has put it: “Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity”
Surveyors and Managers
This is one area where AI is seen to potentially have a huge impact. According to a report produced by RICS in 2017 there are 42 functions related to Surveying, of which 11 are highly vulnerable to technological advances right now and over the next decade another 7 that have a high level of vulnerability, while a further 22 are likely to be impacted in some way.
Functions where strong human qualities are required such as Management, Organization, Physical Maintenance, Strategy, Sales and Opinions remain somewhat unchanged over the next decade.
The key changes will be in areas such as Appraisals and Valuations, Cost Estimation, Property Information, Maintenance Planning, Lease Management, Preparation of Reports and Legal Documentation, Risk Assessment, Space Management and Analysis.
While we have already seen how valuations are already being impacted in the residential sector, we can also expect a similar impact on the commercial sector.
Combining IoT (Internet of Things) devices, such as sensor and cameras, can provide data that both helps to maintain and manage properties. These technologies can also be used in providing deep insights into space management, for example, the understanding of how humans interact with the buildings. This can, in turn, feed information that helps set rental prices for retailers or service providers using the space. By adding AI to the data gathered by the IoT platform predictive models can be created that help both with preventative maintenance as well as modeling for future development.
Architects & Builders
Construction is one area we can expect to see robots actually taking on the role of humans. There is an increasing skills shortage, as the demand for new construction increases. According to Arcadis, meeting house building targets in the UK alone will require the hiring of 400,000 new construction workers each year between now and 2021.
Robotic technology may help alleviate some of this demand and there are real world examples of robotic manufacturing pre-building large components of the structure for assembly on site.
In May 2018 US Company ICON announced that it had built a 650 square-foot home using a 3D printer and last year Russian company Apis-Cor announced a similar project built in the harsh conditions of a Russian winter. US company Construction Robotics have developed bricklaying robots that are capable of laying 2000 brick per day, compared to 400 by an average bricklayer. While these early-stage projects are very limited in scope they are clearly a precursor for a massive shift in the construction industry.
Automating the architectural process is less likely and the human factor remains essential in most aspects. Patrick Hebron, a user experience designer with Adobe Systems and adjunct graduate professor at New York University, feels that the human element is crucial, designs by machines alone would create ‘an unlivable built environment’. However, the revolution for architects will be around the capture and use of data to help drive effective design and the automation of repetitive tasks that slow down the design process. These changes will help to improve the speed and efficiency with which architects are able to deliver their designs.
Information derived from the use of IoT combined with AI can be used as a further form of information to architects to help create the most effective designs and use of space.
The tools used by architects are also getting the addition of AI integrated into their core functionality. LunchBoxML, which offers Machine Learning capabilities, and is now included as part of the LunchBox plug-in for Grasshopper and Dynamo to further enhance this widely used design tool.
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The property industry has traditionally been slow to adopt new technology, however, the latest wave of ‘intelligent’ technological advancements has huge implications for businesses to remain competitive. With so many companies in the industry now taking active steps to change the way they do business and achieve results, those companies who fail to evolve may be left behind.
However, people skills remain as important as ever. Good salespeople capable of building human relationships; the ability to see a deal where others see failure; those complex problems that only seem to manifest themselves when you are half-way through a task; or just instinctively knowing what people like. All of these examples of natural human intelligence will remain extremely valuable assets to their respective companies. However, AI will change the way they work and those that are able to adopt those changes quickly, along with their intrinsic skills, stand the best chance of future success.
While IT remains a function within all organizations, ‘technology’ is increasingly a new function that must be addressed. This differs from IT in that it is not about tools that enable, such as email and printers, but rather tools that enhance or change the actual business function requiring a different type of technology background to define, design and deliver. A role that clearly understands the business function combined with a profound understanding of the technology.
