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AI in Real Estate: Death or Glory?

Last week Remit Consulting produced, for the RICS, a report on “The Impact of Emerging Technologies on the Surveying Profession”. The bottom line: “Surveying appears to be an industry in which 88% of the core tasks are ripe for automation to a greater or lesser degree”.

Not surprisingly, in a parallel survey where they asked the industry how they would score themselves, the answer averaged out at 46%. 

I would say this discrepancy indicates that there are going to be big winners and big losers within surveying over the next five or so years. Much of the industry either does not understand what technologies are available and in development, or chooses to dismiss them as ‘nothing to see here: move on’.

In a world of rapid technological change you do not need to outrun the ‘robots’, you just need to outrun your competition. It is not just surveying where this is true but applies to the whole business world: those that adopt and adapt to new technology, will have an increasingly large competitive advantage against those that don’t. In fact the situation is more binary today, in that the technology is becoming so powerful that failure to keep up will render you ‘unfit for purpose’ and functionally redundant. Harsh but true.

Conversely, just as when farmers adopted tractors instead of horses, they found themselves ‘augmented’ and exponentially more productive than before. Simply put, the technology allowed them to do more with more. 

The great enabler today is Artificial Intelligence, the most important technology that you do need to get to grips with. As the smartphone has transformed so many businesses, and so much about how people live, AI will transform real estate. Much of that 88% of core tasks being ripe for automation is down to AI.

What then do you need to know?

First, you need to know what AI is and what is it good at? At the same time as being transformational AI is massively overused as a term and not everything being touted as ‘with AI we can now….’ is true. You need to be able to spot the Snake Oil salesmen.

Secondly, you need to understand why data is so important. The four V’s are critical: Volume, Variety, Velocity and Veracity. What data do you have, is it usable, what other data sources do you need, who has them? And then, what to do if you do not have much data?

Thirdly, you need to know about on-demand Cognitive Services. Whilst this is a very advanced area of technology it is becoming very rapidly commoditised, at least up to a point. There are a wide range of quite extraordinarily powerful tools at your disposal, and available on a pay as you go basis. One of the joys of modern business is that a startup can access exactly the same software and hardware as can the largest multi-national. Might is not right in this world. In many ways the most important tech are the humans you have in your team; the tools can be bought but inspiration and imagination are far less available ‘off the shelf’.

Fourthly, you have to dive deep into your own business to identify how, and where, AI can become manifest in real world applications. The Remit report helps here, as it suggests looking at the tasks you do and scoring them against five variables: Data content, Algorithmic content, Learning content, Interpersonal skills and Physical presence. Having understood what AI is good out and what your options are, you should then be able to see where AI/Use case fit is strongest. What can you automate, to save costs or to be able to do 10 times more efficiently that you can today? AI is partly about removing humans from processes, but much more so it is about augmenting your capabilities and enabling humans to be much more productive. Let the machines do what they are good at so that we humans can do what we do best.

Fifthly, there are dozens of companies specialising in different areas of AI. You need to be exposed to who they are, so that you can build your ecosystem of partners. Much AI has applications across many different business sectors so you need to look wider than the #PropTech world.

And lastly the hard bit. You need to put together agile, cross functional teams in order to implement the above. As the technology becomes more advanced, the need for tempering it with human skills gets ever greater. You need people who think, people who feel and people who do: different skills with different utility. AI is a pervasive technology, it will impact on every area of your business, so you must have every area of your business committed and engaged in designing how best to use it.

AI is a big, somewhat challenging topic. The steps above will go a long way to help you navigate the future it is defining. 

Antony

Remit Consulting - The Impact of Emerging Technologies on the Surveying Profession - http://bit.ly/2uAFlKy

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Commercial Real Estate and Retail: New Business Models

The commercial real estate and retail markets are changing. Both are being impacted by the same technological, financial and societal changes. 

They both need new business models.

The reason being “The Real Estate Business is no longer about Real Estate”, or at least soon won’t be.

Why? Well the answer lies in the twin trends of the move from Products to Services and Ownership to Access.

Increasingly we are moving to an almost post consumer world where we are less bothered about accumulating more possessions and much more interested in being provided with services, experiences and ephemeral pleasures. 

So Uber instead of Cars, Spotify instead of CD’s, Netflix instead of DVD’s: on-demand this, on-demand that. Why bother to own something you seldom use, that becomes out of date rapidly, or that you really cannot afford. Rent it when you need it.

And Real Estate is not immune from this trend. 

Just as it is now easy to buy almost any Software as a Service, so it will become with real estate. Space, as a Service, is the future of real estate. On demand and where you buy exactly the features, and services, you need, whenever and wherever you are.

And there are 5 technological ‘megatrends’ (Mobile, Connectivity, Cloud, IoT, AI) that are ‘the great enablers’ of all the change heading our way. They cannot be resisted and the real estate and retail industries needs to co-opt them as friend not foe.

These 5 megatrends are enabling us to live, work, and play in different ways. We now live in a world where we do not need offices as places we go to to do our work, and we do not need shops to go shopping. Our demands have fundamentally changed.

And this change in demand will lead to a change in supply. Our customers are starting to prefer services to products, don’t need to go to a shop to go shopping, are used to being served on-demand, and are uber connected with a 1980’s supercomputer in their pocket. 

So we need ‘New’ Retail and ‘New’ Real Estate. And the likes of Alibaba are giving it to us, in the form of O2O, offline to online. In January they purchased Intime, a Chinese owner of 29 department stores and 17 shopping malls. An e-commerce company buying large quantities of physical real estate! Isn’t real estate what the real estate industry does? It seems not. Are we being, in software parlance, deprecated?

Many things in the world are becoming barbell shaped. We see the hollowing out of the middle class, and companies becoming big or staying small with little in the middle. And this applies to retail in spades. Effectively there are two classes today: quick or experiential. Even before the Whole Foods acquisition 45% of the US population lived within 20 miles of an Amazon fulfilment centre. Yet the industry wallows in the supposed attractions of click & collect. As last mile delivery gets faster, the Sword of Damocles hanging over retail gets sharper and sharper. Be fast and cheap or offer a great experience; do neither and Amazon will put you out of business.

The upside, if you think with your off work consumer hat on, is that shops are going to get very much better than they are today. Better brands, better products, better stores, better customer service. Everything about shopping is going to be better. When your customer no longer needs you, you have to try a lot harder at making them want you.

And there are many examples already of brands that are rethinking what retailing means when it is no longer about distribution. Making great use of the same technology that is changing everything else.

Artificial Intelligence is why Alibaba have bought Intime: as they themselves say, they are not in fact an e-commerce company, they are a data company. And retail is the perfect industry to make use of artificial intelligence. From end to end, the dynamics and processes are almost tailor made to take advantage of AI. Which is of course why those who can, will. As mooted above, maybe real estate people are not the best people to manage real estate?

Or rather, real estate is going to have to become a different business, with different business models. No longer will understanding bricks and mortar, and delivering a product suffice. No longer will the customer of a shopping centre owner be the retailers who pay their rent. No, the people that pay are no longer who you need to pay the most attention to. That worked in the Product era, it doesn’t in the Service era.

Marc Andreessen, who wrote the first web browser, coined the term ‘Software is eating the world’. It has already eaten the music, film, taxi and hotel industries. It is now coming for retail.

This is a summary of the presentation I gave as part of the Bayfield Training course on 'Shopping Centre Investment'.

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