Whether in a real estate industry event or reading an article about ‘PropTech’, we have all seen the image – something like a ‘dream scenario’ where we can instantly visualize every detail around a building or simply purchase a home in the click of a button. Of course, all being powered by ‘Artificial Intelligence’, ‘Big Data’ and ‘Blockchain’ at the same time.
However, there is one word any real estate professional finds daunting and that is ‘Automation’! On the surface this may be justified. A paper published by the Royal Institution of Chartered Surveyors (RICS) found that 88% of a valuers’ daily tasks are suitable for automation. This statistic alone is enough to cause sleepless nights for any professional who has been in the industry for years and also worked towards professional qualifications. We all say we like to embrace change until we have to.
So is there reason to be worried? What if we look back into the history books before and after the industrial revolution. Workers went from using the handloom to using machinery that could boost their productivity multiple times over that were previously not imaginable (and creating even more jobs and opportunities in the process). Coming forward to today, we can see AI and technology augmenting roles in multiple industries, from assisting lawyers in contract reviews to X-ray diagnostics in healthcare and for commercial flights, where a pilot only manually flies the plane for minutes out of a 16 hour flight from Hong Kong to New York. In the finance industry, we can obtain instant information on a company’s value and foreign exchange rates.
Let’s look more closely at real estate. At USD228 trillion it is the world’s largest asset class, supports the majority of bank lending and typically accounts for 70-80% of our personal wealth. However, despite this, whether we own property or work in the industry we still ask why can’t we see the value of every property? Why aren’t contracts exchanged automatically? and quite simply, to answer shall I buy, sell or hold a piece of real estate?
Why is it so difficult to answer these questions? The reason is data. Say an investor wants to purchase or a surveyor wants to estimate the value of a building. They would need to know ownership details, who are the tenants, net effective rentals, floor areas, recent sales transactions and so on. The current processes to obtain this data are painful. Data sourcing involves digging through hundreds of in-house spreadsheets, siloed government departments, property brochures, planning portals, calling around industry peers and more. After days, weeks (or even months) of research and expensive data purchases all this data then gets put back into spreadsheets where analysts will try and draw often unclear solutions. Up to 90% of a project’s time can be spent on sourcing data, with minimal time remaining to conduct deeper analysis, draw firm conclusions or negotiate that deal for your client. On top of that, you also cannot be assured that the data you have is reliable and there is no standardization. This creates a whole backward-looking industry plagued by huge inefficiencies and lost value creation opportunities.
What the whole industry needs is access to better data. Combining this with the huge increases in computing power and advancement in algorithms for deep learning we’ll be able drive real transformation in real estate. As history has shown us, this change and increase is going to augment the role of an real estate professional, whether you are a surveyor, agent, investment analyst or asset manager, driving our service offerings up the value chain. To capture ‘big data’ in real estate and lay the foundation for change we need to ensure the 4 V’s are present – volume, velocity, variety and veracity, alongside the standardization and the adoption of globally recognized standards.
Realinflo is a platform for real estate professionals to work together and strive towards leading transformation through data. Progress on solving the data problem will be made through industry collaboration.
Gary Walter MRICS, CEO, Realinflo