Artificial intelligence in real estate
The development of ChatGPT has brought artificial intelligence (AI) to the forefront of our minds. However, AI research has been going on for decades and AI has been used in some areas for quite some time, such as robotics in the automotive industry. It has also found its way into the real estate industry in some cases, taking over not only operational tasks but also changing decision-making processes.
How is AI used in the real estate industry?
More specifically, artificial intelligence (AI) is a learning system characterized by its ability to adapt to its environment. Through its interfaces to the outside world, it optimizes itself, takes on complex tasks independently and continues to learn as it operates. In the real estate industry, AI helps not only to improve the efficiency of operational tasks, but also to transform decision-making processes.
Examples of AI applications include asset and portfolio management, property and facility management, market forecasting and customer relations and building automation (see smart buildings).
Asset and portfolio management
AI-based analysis of large amounts of data allows for a closer examination of possible future scenarios and the identification of hidden opportunities and risks. This gives decision-makers a deeper insight into market mechanisms, so that decisions about the strategic direction of a portfolio are no longer subjective but based on data.
AI can be used to prepare exposés, arrange transactions, value properties more accurately based on the data collected, complete due diligence faster and process transactions. It can also be used in the rental sector for contract management and claims management.
Property and facility management
AI can be particularly useful in maintenance and service management to identify what needs to be done at an early stage. In other words, AI makes it easier to take a proactive approach. Other potential applications include improved space management, better management
What advantages does AI offer in the real estate industry?
The ability to analyze large amounts of data and recognize complex data patterns is one of the benefits of AI (not only) in the real estate industry. It can relieve humans of many time-consuming processes, increase efficiency, and contribute to clear, data-driven decisions.
Analysis of large amounts of data
While the human brain reaches its limits when processing large amounts of data, AI does not because it recognizes complex patterns and, as a learning system, quickly adapts its analysis as data patterns change. In addition, AI can quickly compare data—such as market data in portfolio analysis—allowing for a much more accurate assessment of potential and risk.
Time saving
Creating and reviewing contracts takes a lot of time. AI can take on many tasks here, from checking to suggesting improvements. The same applies to reviewing documents from the data room during due diligence, where AI can also provide a translation, for example.
Similarly, AI technology can handle most of the tasks associated with monitoring incoming payments and claims, which not only improves the dunning process and reduces administrative costs, but also makes it easier to keep track of claims that could potentially become a risk.
Efficiency
When it comes to processing and analyzing large amounts of data, AI increases efficiency. It can handle many administrative and/or time-consuming tasks better and faster and create more accurate analyses based on the data available. Increased efficiency always translates into cost savings.
Customer loyalty
Another aspect of efficiency is improved customer retention because of highly personalized interactions. With AI taking over many of the customer interaction and complaint management tasks, there is time to provide more intensive customer support in other areas. Real estate agents and managers have been aware of the potential of AI for some time and are using the appropriate tools.
AI—reservations
With the advent of ChatGPT and chatbots, many people have had rather strange experiences with AI, which does not always increase acceptance. At the same time, there is a public debate about the risks of AI and its social impact. Some of these concerns are the same as those that have always accompanied any technological innovation or rapid development. After all, it is still people who decide whether to use AI in a positive, useful and meaningful way, or whether to abuse this tool. The best way to minimize reservations about the use of AI is to ensure transparency in its use and to ensure high-quality results.
There is no doubt that AI can perform many tasks better than humans and it offers humans the opportunity to focus on tasks other than repetitive ones.
AI is, however, an energy guzzler. Data processing takes place in data centers, requires high computing power and is very energy-intensive, especially during the AI’s “learning phase” but also to a large extent during application. And energy consumption also means a high carbon footprint if not all the energy used is renewable.
AI-driven changes: looking to the future
AI will (further) automate many processes in the real estate industry, especially in the operational area. More precise analysis and increased efficiency will make the application of AI a decisive factor for the future success of real estate companies. While AI can take over tasks and speed up processes, it cannot replace humans. Adopting AI-based solutions is a step to the next level in the digital age.
However, the use of AI comes with challenges. They affect both those who develop AI solutions and those who operate these tools and use their functions. Acceptance among real estate company employees will increase with the quality and reliability of AI in performing its various tasks. However, these employees must also be trained to operate and use the tools provided by AI.
One issue that affects everyone is data protection, especially in areas where personal data is processed. And as with digitalization in general, data security is an important issue. AI-based data discovery solutions can scan all storage locations and automatically classify data. And because AI can quickly and reliably find patterns and anomalies in large amounts of data, it is ideal for threat detection. It can monitor network traffic in real time and immediately alert data security personnel to suspicious activity. Rather than relying on pre-defined threat patterns, AI learns over time what is normal on an organization's network and identifies anomalous and potentially dangerous activity.