Artificial Acquisitions: Real Estate & AI in 2019.

Artificial Intelligence (AI) has been a hyped topic in recent years, with supporters championing the potential of machine intelligence to operate driverless cars and save lives through enhanced medical diagnoses. Others, such as the late Stephen Hawking, fear a dystopian future where humanity faces extinction, with even the most incisive of intellects at risk of being superseded by superior robots. So where is the Real Estate industry positioned in a world where computers increasingly learn, understand and make decisions in 2019?

Predictive Analytics

Started in January 2014 Dutch firm GeoPhy, which also has offices in London and New York, raised $33 million in a Series B funding round in January 2019. The AI service works by gathering data from such diverse sources as demographics, satellites, crime rates and proximity to shops to calculate property values. Although its focus is on the commercial sector it has ambitious plans to expand into residential, with the long term aim of understanding the value of every building in the world.

Tel Aviv startup Skyline AI raised $18 million in August 2018. The company monitors every property in the US with more than 50 units, covering 10,000 data points over 50 years' worth of data. When the company identifies a property worth buying it raises funds or forms a joint venture with a financial institution, using its technology to identify optimum investments and exploit market anomalies. Skyline AI made its first transaction in June 2018, completing a $26 million deal for two properties in Philadelphia with little human involvement. Both companies aim to offer less expensive and speedier valuations than standard human appraisals, removing subjectivity and helping buyers and lenders understand the true value of a property.

Construction

Consultancy firm McKinsey reports that construction technology has received $13 billion of funding since 2013. A partnership between IBM and Fluor, a global engineering and construction company, now uses a Watson-based system to analyse the vast volume of data on large-scale construction sites. Constant analysis will help forecast issues before they arise and automate the distribution of workers and materials.

In 2018 tech firms invested billions in construction tech, Oracle acquiring Australia's Aconex for $1.2 billion in February, their software digitally connecting owners, builders and other teams to manage data, documents and costs across all stages of a project. In January 2019 the US firm AirWorks Solutions raised $2.3 million in seed funding. Their software collects data from drones, aircrafts and satellites, creating computer aided design site plans, allowing developers and engineers to analyse sites in near real time. The company aims to reduce the time it takes to produce aerial site plans from seven days to 24 hours.

Sales

In October 2018 a three-bedroom property in Dublin became the world's first to be sold via an online AI auctioneer, operated by auction firm clicktopurchase. Online bidders were verified and the AI auctioneer, known as gAbi, managed proceedings until completion. The system utilised blockchain technology to provide an auditable electronic record of the transaction, including the signing and completion of the sales contract, with the winning bidder paying €345,000 – well above the €250,000 guide price. On 6 December London investment agency Singer Vielle sold a commercial property in Wiltshire with the same auctioneer, with the sale figure of £475,000 being 20% above the guide price.

The Future

AI is likely to be best deployed in the sector as an assistive tool. AI, through voice and facial recognition, will improve accessibility and security during and after the construction process. The use of robots in construction is likely to lead to improved structural quality, as industry professionals digitise data through Building Information Modelling (BIM). Algorithms will help those on the sales side find the perfect property for their clients. AI chatbots, such as those recently introduced at AXA's real estate insurance offering, will become available 24/7 helping customers with their research and allowing real estate businesses to generate revenue outside of traditional office hours.

A final positive is that AI, at a time of heightened concerns about climate, could also lead to more environmentally friendly properties. With a building's heating and cooling optimised through the monitoring of weather forecasts, energy retention and spatial use, AI may yet help us build an efficient, comfortable and sustainable future.