Artificial intelligence and real estate - not just an evolution, a real game changer!

Published date13 July 2020
Pages15-18
Date13 July 2020
DOIhttps://doi.org/10.1108/JPIF-06-2020-0063
Subject MatterProperty management & built environment,Real estate & property,Property valuation & finance
AuthorMarcelo Cajias
Artificial intelligence and real
estate - not just an evolution, a real
game changer!
Marcelo Cajias
Department of Investment Strategy and Research, PATRIZIA AG,
Augsburg, Germany and
University of Regensburg, Regensburg, Germany
Abstract
Purpose Digitalisation and AI are the most intensively discussed topics in the real estate industry. The
subject aims at increasing the efficiency of existing processes and the institutional side of the industry is really
interested. And in some ways, this is a breakthrough. This article elaborates on the current status quo and
future path of the industry.
Design/methodology/approach The real estate industry is evolving, and parts of the business are
increasingly being conquered by proptechsand fintechs. They have come into real estate to stay not
because they discovered inefficiencies in the way one manages and does business with real estate, but because
they come with an arsenal of new technologies that can change the whole game. The article discusses a path for
changing the game in real estate.
Findings location, location, locationhas now evolved to data, data, data. However, there is one essential
aspect that must be considered before the latter can become the real value creator: the ability of market players
to analyse data. And this does not mean being an excellent Excel user. The near future sees a solution called
Explainable Artificial Intelligence (XAI) meaning that the econometric world constructed decades ago has an
expiry date.
Originality/value One needs to delete two myths from their mind: data quantity is proportional to accurate
insights and that bringing your data to a cloud will deliver you with all the insights your business needs almost
immediately.
Keywords Econometrics, Artificial intelligence, Hedonic models, Machine learning
Paper type Viewpoint
Every real estate cycle tends to have one dominant theme. After the GFC, for instance, the
industry focussed on sustainability, green labels and green buildings on a global scale. This
topic was stimulated by academia, which played a significant role in providing statistical
evidence about the green premium, which made market players consider the topic more
seriously. Nowadays, digitalisation and artificial intelligence are the most intensively
discussed topics in the real estate industry. The subject is high on the agenda as it aims at
increasing the efficiency of existing processes as well as generating value from data. But this
time things are different. The interest in this area does come not only from the academia but
also predominantly from the institutional side of the industry. And in some ways, this is a
breakthrough as the real estate industry has always been criticised for being a late adopter of
innovations and new technologies.
This time is different also because we are not alone. The real estate industry is evolving,
and parts of the business are increasingly being conquered by proptechsand fintechs.
They have come into real estate to stay not because they discovered inefficiencies in the way
we manage and do business with real estate, but because they come with an arsenal of new
Artificial
intelligence
and real estate
15
The author thanks PATRIZIA AG for contributing to this study. All statements of opinion reflect the
current estimations of the author and do not necessarily reflect the opinion of PATRIZIA AG or its
associated companies.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Received 5 June 2020
Revised 10 June 2020
Accepted 10 June 2020
Journal of Property Investment &
Finance
Vol. 39 No. 1, 2021
pp. 15-18
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-06-2020-0063

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