How will robots make buildings more human?

Real estate isn’t easy to reinvent, but intelligent automation is coming — and no part of the life cycle will be left untouched.

Less than half (47%) of real estate companies are automating their businesses, despite artificial intelligence (AI) coming at us like a freight train.

But that means that over half are on the road to automation – and we are starting to see fundamental changes in the real estate sector as a result.

As we get closer to the tipping point, real estate companies that aren’t getting serious about automation risk being left behind, and EY’s maturity curve, below, illustrates how businesses are already building a competitive edge.

Using intelligent automation to build a competitive edge in real estate

The residential real estate market is undeniably ahead of the curve. Bots already assist agents with their workloads, help them with house hunting and streamline the property inventory processing, for example.

However, the complexity of commercial real estate sector makes automation a challenging proposition. Commercial real estate is illiquid — it can’t be easily sold or exchanged — and the buildings we construct may be around long after we’ve vacated the premises. Real estate isn’t easy to reinvent, and that creates a sense of permanency that can lead to complacency.

MIT has identified six obstacles that it believes will influence the real estate sector’s ability to automate: scalability, regulation, stakeholder complexity, life cycle synergy, liquidity and difficulty with leapfrogging. We asked our webinar participants to name their biggest barriers, and 35% of respondents nominated stakeholder complexity, followed by regulation (24%) and scalability (21%). It’s clear that the biggest automation challenge facing real estate companies is creating an ecosystem that brings everyone together.

Real estate: ripe for disruption

Despite the challenges, commercial real estate is ripe for disruption. According to MIT, 100 of the 750 AI start-ups established in the last three years are specifically targeting the real estate sector. And arguably the world's top property technology (proptech) analyst James Dearsley cites an “explosion of ideas and capital focused on automation,” with 46% of the 7,000-plus proptech firms globally zeroing in on automation. Thus, the “first big wave” of automation is crashing on our shores, as companies develop their data science capabilities.

“The sector is getting ready by collecting all this data and information, but only first-mover companies have started automating tasks,” Chegut explains. Around 72 companies are creating the algorithms that can follow physical and thinking tasks, and a further 90 companies are “rolling out the robots.”

The robots that look like C3PO from Star Wars or Rosie from the Jetsons may be some way off. Instead, robots today are more like the computer in Star Trek — an omnipresent force. They make calculations, solve problems and help companies set the best course of action.

Several of the technology titans are dipping their toes into residential, retail and office real estate, sealing partnerships that will, with time, create end-to-end service offerings with bricks-and-mortar businesses, smart home products, AI-enabled portals, cryptocurrencies and more.

Creating more value along the chain

There are two types of automation: core value chain and enterprise services.

EY teams have seen this play out over several years as robotic process automation (RPA) automates a host of back-office functions, from tax processes to rental revenue testing. RPA is not exclusive to real estate, and often companies don’t consider this “real automation”.

But RPA is changing the way our real estate clients make decisions all the way up to the board level. Automating your back-office processes can create permission to play, and move your company up the maturity curve far quicker. Trust distributions have gone from taking 3 weeks to complete to being done in 28 seconds.

Taking on the lower-risk back office automation can prepare you for the even bigger push into commercial real estate’s core value chain. MIT has identified 132 technologies that it believes will transform the real estate industry. Some of Chegut’s favorite examples include:

• HyperCell, a self-assembly system that promises to meet the need for rapid deployment of new buildings. Each cell is “self-aware” of its surroundings. That means it can climb, roll, change shape and join forces with other cells to create new structures. Imagine an office that could evolve and adapt instantly to meet the changing needs of the occupants.
• Geophy taps satellite images, sales data, transport links, green spaces, density, crime rates and a database of 150 million property records to determine a building’s true market value. Picture a property portfolio that can be valued instantly and daily. Imagine how that could improve your business procedures.
• Affectiva brings emotional intelligence to the digital world by analyzing facial expressions. Affectiva has built the world’s largest database of emotions — the four million faces across 75 countries and 50 billion emotion data points. Imagine how this technology could help landlords to understand and respond to the mood of their tenants.

Alleviating automation anxiety

The signposts are pointing in one direction. Automation is influencing the entire life cycle of real estate from dirt to disposition and no part will be left untouched.