Artificial intelligence and the digitization of real estate
There is no doubt that Artificial intelligence (AI) is one of the greater potentials of the digital transformation, mainly because AI has the potential to revolutionize the real estate sector (and many others) by introducing innovative solutions to the table. There is hardly any limit to how AI could be integrated into systems or processes both privately as well as commercially.
An overview of the themes:
According to the PwC, AI-based innovations will lead to an 11.3% growth in German GPD by 2030. Its efficiency and productivity are indisputable and even though a lot of developments need to be made to achieve its full potential, we have entered a time where digitization cannot be overlooked anymore. The real estate sector, an institution in itself, will not be an exception, on the contrary, the fruit of the use of new technologies will not only bring cost savings but also improve overall efficiency in operational tasks.
Why will AI become an indispensable tool?
Because the real estate market lacks digital mechanisms and the processes are often outdated, problems that can be solved through AI-based algorithms. In the following chapter, we will explain what these AI-tools do and which AI-based software solutions already exist.
Artificial intelligence - Planning through accurate analysis
A widespread view is that thanks to AI, working life can be made more pleasant and efficient – as it is the case in the real estate industry. The administrative work in the real estate sector is usually time-consuming. Throughout the whole buying/renting/selling/building and managing process, there are a lot of documents and contracts that need to be read, analyzed, adapted and scanned.
Besides, due to the high demands and constant handling of paper documents, a lot of data gets missing: Floor plans disappear, information about buildings get lost and because of that the construction process becomes more complex and cumbersome. This is exactly where AI comes in handy, in these situations the technology helps to get a better overview of all assets (even those where data is missing) by, for example, scanning it and rebuilding the missing information. The meaningful predictions help asset holders to take easier and safer decisions about their assets.
What does artificial intelligence mean for the real estate economy and how can the technology help with how transactions are made? And where are the chances?
There are already a couple of AI-based algorithms that extract relevant information out of paper documents and automatically digitize them. The greatest advantage for the real estate industry lies in the automatic structuring of data as the real estate sector drowns under huge amounts of information. Artificial intelligence can analyze this data in such a way that patterns can be identified. The digitization process creates a virtual room where all the documents are saved, stakeholders have access to all the relevant information concerning their assets as well as a clean and organized real estate portfolio.
The advantages of the real estate digitization
The era of intelligent buildings has begun and is becoming even more efficient and simpler thanks to predictive analysis based on machine learning. Asset, facility, and operations management are supported by the use of these new technologies. Artificial intelligence has the power to transform the sector through innovative solutions even in the dynamic real estate sector. Slowly but surely its potential can be seen as a key player for the new developments in the industry.
These are the biggest advantages of the digitization of the real estate sector:
Cost savings: The main problem with these huge construction projects is often the lack of information and that’s exactly what AI rectifies by providing the data even before the construction starts.
Cost efficiency: Better forecasting of the costs through an effective surface area determination. By summarizing the exact number of square meters, heating or area-based ancillary costs (e.g. cleaning) can be better predicted.
Security: Huge amounts of operating as well as building data are collected, analyzed and often improved so that the detection of problems is made early on and measures can be more easily taken. The early detection of problems is the core of building security.
Speed: With increasing digitization, due diligence inspections can be carried out much more quickly. In the future, real estate professionals will be able to focus their activities more on consulting than on examining documents.
Ecological developments and sustainability: Smart homes or buildings are a concept that has been developed a lot in the last few years: Building contractors take smart solutions into account in consumption-optimized energy concepts. Through AI, technology can continuously learn about new or old consumption situations and improve them (smart heating thermostat, power guzzler detection, and extinction, etc.).
An example of success for smart buildings is the Empire State Building. Over 60 energy-saving measures were tested and 8 of them were selected. These measures resulted in energy savings of over 38%. Not only has energy consumption been reduced, but also energy costs: the Empire State Building expects to save $4.4 million a year.
Artificial intelligence & real estate – These occupations benefit the most from it
To sell efficiently and accurately a realtor needs to provide their clients with properties that match their tastes and wishes. The whole process of getting to know the client's tastes and needs is long and sometimes difficult. Plus, the search will be complex and not necessarily accurate. Often the whole selling/buying operation lasts weeks instead of days. That’s where AI comes in use, because of its fast learning capacity it will come up with results that will match the client’s needs individually. For example, bots (that are based on AI) can learn from past interactions with other interested buyers and compare the client's tastes, therefore finding accurate results. Tailor-made solutions can be created in seconds.
The use of bots often provokes skeptical responses, but their efficiency and their 24/7 availability make them a strong component in sales. In April a competition “Broker vs. Bot” was launched by online news journal Inman, where for three days a realtor and a bot competed over who between the both of them could predict the better buyer preferences. The bot won.
Despite the many opportunities and advantages artificial intelligence offers, many wonder whether jobs and activities will be replaced by machines and artificial intelligence. Many people believe that artificial intelligence will lead to an overall loss of jobs, market shares as well as sales potentials. This should not stop the process of digitization, because AI will not replace anyone but on the contrary, boost the efficiency of a physical person by helping it do better predictions and/or decisions. Investors, asset holders and owners who decide to close off themselves to the world of artificial intelligence or even the digitization, would inevitably recede into the background of the market.
Conclusion – AI in the real estate sector
The applications of artificial intelligence in the real estate industry are complex and multilayered. AI is not the only method that can help standardize the processes in the sector but is probably the best to start off the digitization processes. The first step would be to put into the right order and context all the data produced in masses by the market. In the second step, AI can help to thumb through this information to the most important aspects or compress it into summaries. The obtained data can serve as a basis for decisions concerning project development, acquisition, property or even facility management, and valuation. Optimization potentials can be determined faster and more efficiently regarding construction, operating, maintenance, modernization or new construction costs of the property.
Convaron helps you to digitize your real estate data. We automatically extract and structure the information about your property and present it clearly in our comprehensive database. Using our AI-based algorithms, we were able to digitize and analyze over 70,000 floor plans in a very short time.
Secure your knowledge advantage with artificial intelligence!