TechCrunch+ recently claimed that global real estate as an asset class represents more than US$ 50 trillion, which confirms just how significant it is as a key driver of economies. Within that space, 2022 was a catalyst year for investment into a specific component of proptech, which is artificial intelligence (AI), estimated to be some US$ 49 billion, 40% more than in 2021.
One of the real estate companies that made a significant investment in AI is the US company Zillow, which in January 2023 launched an AI-powered feature "that allows shoppers to search for homes in the same way they would talk to their friends and family". How this differs from search engines like Google, Bing etc., which are not explicitly designed for targeted real estate searches, is that the Zillow App allows users to undertake dedicated property searches based on specific features that match their lifestyle, shortening the sometimes long-winded house-hunting process in a simple and uncluttered manner.
This is but one way that real estate players in the US are utilising and investing in AI-enabled platforms and Apps, but locally the real estate sector faces many challenges before it can realise the full potential of AI to transform the sector. Adriaan Grove, CEO and founder of Entegral, which develops platforms for real estate professionals, explains firstly how AI differs from other proptech applications and, secondly, what AI could do for local property practitioners.
How do AI systems operate?
“Simply, AI systems use powerful algorithms and statistical models to analyse and learn from vast amounts of data. Without data, AI is useless; it is the key ingredient. However, there are different subsets within AI, including machine learning (ML), natural language processing and computer vision, each with their own specialised applications and techniques.
“Ultimately, AI is a data-hungry creature; the more you feed it, the more effective it becomes. It allows us to unlock an incredible amount of property information, inclusive of historical sales of individual properties, neighbourhood demographics and, even better, provide market price predictions. Agents are better able to make informed decisions about how long it will likely take to sell a property, and what to list it for.”
Keeping in mind that AI systems improve every time a new record is added to it, and with a robust local property market, the question is, why isn't AI being embraced in SA as much as it is elsewhere? Sure, SA was slow to adopt proptech and came under some intense criticism as a result. Still, surely AI presents enormous opportunities to leapfrog traditional tech development stages and potentially be, if not globally then continentally, a leader in this space?
“SA's biggest problem is that current real estate data is ring-fenced, which prevents proptech companies from building better tools for consumers and estate agents. Even at Entegral, where we are constantly innovating in the proptech space, we have struggled to gain the qualitative data that makes AI extremely powerful," says Grove. "This hasn't stopped us, though, and we've only just scratched the surface with the recent launch of our first AI implementation, which is an integrated virtual assistant to assist property practitioners to write better listing advertisements, social media posts, or even allow the AI to create new listing content.
“On the horizon are more AI-related features, but we have taken the approach to gradually introduce our users to this type of tech so that we can consolidate their feedback to better guide our direction. We are currently researching listing analysis, price predictions, and quicker bond origination processing.”
This is on top of the already powerful key customer relationship management (CRM) products that Entegral offers to agents in simplifying, connecting and automating their business activities. And proptech is proving to be very cost-effective for customers, with quicker, easier access that is empowering not just agents, but buyers and sellers too.
Impact on the real estate industry
“I predict that AI in the long-term is going to be far more disruptive to real estate than anything we have experienced with the aggregation of listing data on portals run by traditional proptech,” says Grove. “This is because AI is going to need deeper data, such as agents needing to reveal more about their commission incomes. But the trade-off is that they will be given methods for more streamlined and quicker sales.
“The future of real estate in South Africa, as it is in the rest of the world, belongs to the AI-empowered real estate agent. While there is a wave of AI tools being launched worldwide, I highly recommend that anyone contemplating entering this space starts small and with a real problem to solve, not a scenario.”
This is for two reasons …one, because the industry is shifting at a rapid rate with the impacts of ongoing inflation and interest rate changes, so users need to accurately understand realities and how AI interprets those, and secondly, because the sector is driven by human emotional experiences and engagements.
AI is the opposite; it is not built on expectations, estimations or emotions. It is purely objective, accurate and non-emotional. This shift may be a challenge at first, but Grove feels that SA cannot afford to be left behind the global community as we were with proptech. “Those who use it are going to be seen as progressive, particularly as the market is now flooded with tech-minded buyers and sellers who expect immediate responses and the truth.”
Writer: Kerry Dimmer
