Imre-Gustav Vellamaa of R8tech says that Artificial Intelligence (AI) is here to stay and improve our lives.

More and more companies in a wide and ever-expanding range of sectors are adopting AI to achieve greater efficiency and reach new heights of success. Even the most conservative industries - Real Estate (RE) and Construction being prime examples - are accepting AI (not too fast but steadily, step-by-step).

The goal of this article is to simplify the decision making process for RE teams when considering the overwhelming number of different technologies available today, with a particular focus on AI.

To begin, I need to remind you about some of my previous articles that will enable RE owners and managers to better understand the situation.

Previously I have focused on the confusion about the many overlapping KPI claims in PropTech that are actually not the same. For example, 30% energy savings are promised by different consulting, sensor installations, monitoring- and analytics platforms, AI-controls etc… Can it really be so? To put it simply - no, definitely not. Find out why here.

I have also taken a look at the many new opportunities arising from AI adoption in RE in my article ‘Should the Real Estate Industry Avoid (Or Postpone) AI Adoption?’ published on the GRI Hub.

In addition I would like to recommend a good blog (this is not written by me) “AI Technology FAQs: Everything You Need to Know About the Methodology Behind Artificial Intelligence” to learn a bit more about AI in general.

What AI solutions are available for RE?

A good universal rule - not just related to AI, but to anything - to know and follow is that it is always easier to make any choice if you know:

  1. What do you need?
  2. What is available to cover your needs?

I will not speculate on what you need - this will vary on a case-by-case basis - but I can still guess something based on my 7 years experience in supporting a RE portfolio of 4 million square meters across 20 countries under the current European legislative framework.

And don’t worry, I won’t tell you that you need AI for all of your challenges, but in several cases this technology can offer the additional value that nobody/nothing else can.

I asked AI how AI can be used to support RE, and it answered my question like this:

“AI offers numerous benefits that can lead to cost savings, improved services, and competitive advantages:

Property Valuation and Investment Analysis

AI can analyze vast amounts of data from various sources (market trends, historical data, economic indicators) to provide accurate property valuations and investment analysis.

Predictive Maintenance and Facility Management

AI-powered predictive maintenance uses data from IoT sensors and building management systems to predict equipment failures and schedule timely maintenance. Facility Management (FM) related topics: higher energy efficiency and CO2 reduction, increasing indoor climate comfort and FM teams decision making and efficiency etc.

Tenant Experience Enhancement

AI-driven platforms can personalize tenant experiences by analyzing preferences and behaviors. Services include smart building technologies, chatbots for tenant inquiries, and customized amenities.

Market Analysis and Forecasting

AI tools analyze market data to identify trends, forecast market movements, and provide actionable insights for strategic planning.

Lease Management and Optimization

AI algorithms can automate lease management processes, from lease abstraction to renewal reminders and compliance tracking.

Space Utilization and Design

AI can analyze how spaces are used and provide recommendations for optimal design and utilization, incorporating factors like employee movement patterns and occupancy rates.

Transaction Management

AI can streamline the transaction process by automating document management, due diligence, and contract analysis.

How to select the best AI for your RE: Universal Tips

AI is still a (relatively) new technology, and so it is no surprise that many companies in this industry are still very young and not widely known globally. RE, however, is a long term industry, which can be seen clearly with financial ROI calculations for RE projects nowadays commonly being for around 15-20 years.

This means that RE cannot afford to take just any uncalculated risk to break a business plan of 15 years with a “one click“ - even if the AI technology has a reliable track record. What makes it easier is that the same rules apply for all the business partners, including providers of AI solutions.

Thus - like in every business - it is critically important to check a potential partner’s history, size, team, investors, markets, clients, memberships, certificates, publicity, etc - all of the aspects that can make a partner reliable… or vice versa!

Also, if possible, it would be worth at least starting with more than just one AI-solution to better understand their SWOTs (Strengths-Weaknesses-Opportunities-Threats) in order to make more informed long-term decisions.

Another factor to consider is whether to select a partner focusing on the domestic market or with capabilities in the global international ecosystem? Supporting local players is very important, but to be competitive both today and tomorrow, there is no other option in reality than to find the best solutions for your business, no matter where it is based. In the era of globalization, fewer and fewer businesses are closed for international competition - ignoring this fact can lead to potentially fatal results sooner or later.

When exploring the needs and options available, there is no reason to be afraid of leaving your comfort zone and asking for advice on how to avoid problems and make better decisions. There are public materials available, there are colleagues from other RE companies, and there are advisors:

Public materials:

AI is attractive in marketing! More and more users benefitting from AI also promote themselves as “offering new opportunities for our clients with some unique AI solution“. Thus it is worth learning from these stories. Here is just one example: https://omnichannelnews.pl/202...

Colleagues from other RE companies:

Talk to them! In addition there are many RE conferences where knowledge and experience on AI projects are shared by those in the industry - learning from each other in this way is a valuable use of time and money.

Advisors:

Along with often seeming expensive and time intensive, hiring an advisor can also come with uncertainty about whether they are aware of all of the best options - particularly regarding new generative technologies. However, going it alone could be even more costly and provide weaker results - or even have a negative impact.

How to select the best AI for your RE: Technology-specific Tips

KPIs achieved & measured

Try to understand how many KPIs you can achieve with the same solution. For example, energy savings alone are a piece of cake - just turn everything off and you are able to save 100% on your energy bills. But, at the same time, all the people would soon escape from your building because of the loss of comfort and health...

The more relevant KPIs you can achieve at the same time, the better the solution. Also - find out if the KPIs focus solely on cost savings or if there are any extra revenue streams available.

Another topic related to the KPIs on offer is: how to measure these? For example, ‘improved indoor climate comfort’ as a KPI - what indicators will show that it has been improved in reality? From my university days, I remember the words of our statistics professor (acting also as a Chairman of the Supervisory Board of the Bank of Estonia), Prof. Uno Mereste (R.I.P.): “If you find something that can not be measured - make it measurable!”

Connection with AI

AI is a part of the 4th Industrial Revolution together with Smart Phone Apps, Cloud Computing, the Internet of Things (IoT), Sensors, Virtual Reality (VR), 5G technologies, Blockchain, etc. This means that there are several technical prerequisites to using and benefitting from AI.

At the same time, different AI solutions have different requirements for connectivity. Some require additional hardware and some do not, some need 20 minutes and some need several months, etc.

Is your building (what exactly in your building?) technically ready to be connected with the desired AI? What would it require to connect your building with the AI? What are the risks and how can you avoid or minimize these? And - is the AI-partner ready to help you to find answers to these questions?

IT security

Sure, the most secure way is to close all your systems to any external sources. Just based on technological development, you will lose your market position very fast this way. WiFi, for example, has not been an ‘extra’ for many years now - it has become a must-have feature!

It is also probably impossible to isolate everything from external sources - electricity and gas supply, fire alarms, etc. Thus there is no other way than to develop together with the market (sure - market leaders do it even faster) including your IT security.

Starting from your internal IT-security regulations (a la employees’ training, password policies, etc) and ending with your partners’ certificates, their server certificates, etc. And if you still believe that Windows 95 in your computer follows all the IT-security rules in 2024 then just be aware that the support for it was ended on December 31st, 2000!

Your team’s readiness, role, and contribution

Launching any new technology requires contribution from your team. Who are the stakeholders in your team? Are they capable of taking on this new task, and if not, what kind of internal or external support will they need (it really is fine to have support when launching something new that might be even challenging for the inventors themselves.)? How much of a contribution (time, energy) will be needed during the launching stage and later in the operations stage? Are there any learning curves? Are there any risks for your team to lose control, responsibility, or - even worse - their jobs? Do the incentives equal or - ideally - even outweigh the risks for them (nobody has any personal interest in playing a game with no chance to win)?

Investment needs

Do you need to invest and how much? What is the ROI on the investment? Can you share the AI-related fees with tenants and, if so, why should they accept it? Are the fees only for cost saving or is there some additional benefit? Maybe there are also new direct revenue opportunities coming from AI?

Openness to other technologies

There are many cases where companies have already invested in some solutions and, naturally, these investments need to achieve their ROIs. At the same time, technological development takes place incredibly fast and, very often, many of the new solutions are more advanced than the ones that are already in use.

Can these existing solutions be used by the AI and what are the requirements and costs resulting from that? For example, can your footfall counter info be used by the AI to improve energy efficiency or find locations for different properties with higher sales revenues?

The better any technology - particularly AI - can cooperate with other technologies, the better results it can bring. Cooperation instead of competition.

Summary

Just a few years ago AI was only promoted by technology companies, and at best it was a "nice to have" idea that was quickly overshadowed by more pressing matters facing real estate companies.

Today it is the property owners and managers themselves who are talking about AI and the added value it brings for them! The reason for this change is natural:

  • AI technology has evolved and its credibility has increased;
  • AI technology companies as organizations have evolved and become more reliable and stable partners;
  • AI experiences have been positive. More and more success stories are encouraging those with no experience, or even those who had an unpleasant experience.

And finally, the most important point - it really is easy to use AI in your buildings!

Because AI is like a tireless assistant, capable of operating 24/7 and with the only goal being to achieve the results that have been requested.

Do people know - or truly understand - how their (smart) phones work? I will admit that I have virtually no idea about that, and I do not even try. But I know where/when I need it and how to input my requests (calling my friend or finding the nearest good restaurant, for example) to my phone.

The same is true with AI in RE. AI and AI-guys work for RE based on requests. And the role of RE teams? Just to tell them what is needed and what the priorities are. Thus, RE teams are still in the driving seat!

It is AI-time in Real Estate. Are you ready to join the party?