From black box to transparency: AI deals a hammer blow
At the end of June, numerous professionals from the real estate sector gathered for the annual IT and real estate trade fair, Realcomm, in Tampa, Florida. They aim to stay updated on the latest digital innovations, as American real estate experts emphasize that falling behind in the data realm leads to an immediate loss of competitive edge. A specialized real estate and IT event like Realcomm is still a bit ambitious for the pragmatic Dutch market. Remit Consulting, Hans Gerritsen's consultancy firm specialising in real estate, wanted to set up such an event in the Netherlands too but believes it is perhaps a little too early.
Filling conference halls for such events in our country is quite challenging, as Gerritsen has observed. "The real estate sector is inherently conservative, largely due to the nature of the industry. Real estate doesn’t lend itself to quick changes, as results are achieved over the long term. Additionally, there’s a cautious, wait-and-see approach in the Netherlands. While a few frontrunners are driving innovation, the majority adopts a 'me-too strategy': if one of the frontrunners develops something with a software company, others will follow—but ideally without incurring the cost of an IT consultant."
ON THE BACK OF THE NAPKIN
Nevertheless, the Dutch real estate world's interest in digital developments has also boomed in recent years. For example, this year's Provada served as a stage for tech partnerships. Bouwinvest Office Fund announced it was working with digital building operator TPEX to make WTC The Hague more energy efficient. Developer Edge (which is investing in TPEX), NSI, IWG, and engineering and consultancy firm DWA are also opting for smart tech to measure building performance.
The current demand for AI solutions is a far cry from when Gerritsen first launched his company. Back in 2004, when he and his partner founded Remit, the traditional real estate professionals were still making calculations almost on the back of a napkin. Remit introduced new systems for property management and helped clients transition from paper to digital. "We thought Remit would last maybe five years, but a new generation in real estate emerged, eager to do things differently. Companies began seeking efficiency-boosting and cost-saving structures, while shorter commercial leases became more common. Data gained significance, alongside these changes."
Not long after, blockchain emerged, followed by the rise of Proptech, with transparency becoming a key factor, according to Gerritsen. "If you know before your competitor where land is being developed, you gain a significant advantage. So, while everyone supports transparency, no one wants to share their data. That’s still true today. Some companies with smaller software packages have avoided moving to the cloud, fearing data loss. However, a new generation of managers is entering even among these investors and administrators, questioning why things are done the way they are in the real estate world."
A DIFFERENT CALIBRE
Despite the advancements in blockchain and Proptech, these innovations haven’t drastically transformed the real estate sector, according to Gerritsen. He acknowledges firms like Annexum and Orange Capital Partners as trailblazers, but a significant digital revolution has yet to take hold. Moreover, there have been notable setbacks, with the downfall of what seemed to be a promising venture like WeWork marking a low point.
Past digital developments mainly focused on CRM (Customer Relationship Management), but AI operates on an entirely different calibre, Gerritsen explains. "Now it's about both transparency and precise measurability. Previously, with the available data, you could manage to some extent, but it became more challenging, especially when dealing with the properties themselves. AI is a game-changer in this area. For example, planned maintenance and property management become much more efficient. For hundreds of existing properties, vast amounts of data are required—such as details on installations, energy consumption, energy ratings, risk factors, and even the specific types of tenants using the building. AI provides all that."
AI goes even further, transforming buildings into dynamic entities that continuously communicate their needs and uses. "Companies like Luxs and TPEX utilize digital twin technology to create highly detailed virtual replicas of buildings," Gerritsen explains. "Property managers can see exactly how many square meters need painting, and which areas—like those exposed to more sunlight—might require more frequent maintenance. Sensors capture this data and send it directly to the painting company, without the need for manual inspections or estimates. Once the work is completed, all information is automatically recorded and shared with the property manager, tenant, and owner."
PREDICTIVE MAINTENANCE
Technology has advanced to the point where a ChatGPT-like function can be used to inquire about how many boilers have been serviced, check the presence of smoke detectors, or find the location of specific rooms within a complex. The next step is for all stakeholders—owners, maintenance companies, and users—to input and share data. This will allow for real-time monitoring of changes in and around the building, paving the way for predictive maintenance.
ChatGPT has significantly accelerated the development and adoption of AI, Gerritsen explains. "The chatbot is less than two years old but has already become quite mainstream. Advanced spin-offs like Microsoft Copilot have emerged, capable of translating documents into multiple languages, writing project proposals, analyzing quarterly figures, and calculating growth rates. You can even ask Copilot what the average rent is across your portfolio or what action items are in your emails for the week. AI now analyses text, images, videos, sound, and speech, learning from them simultaneously. The pace of progress is remarkable."
According to Gerritsen, the efficiency gains from AI will have a profound impact on many jobs. While predictions about job losses have been made for decades, this time, the real estate sector could see three out of four roles drastically change or disappear. "Jobs like appraiser, broker, property manager, and asset manager are under threat in their current form. Initially, remote valuations had a lot of errors, but with AI, value assessments are becoming increasingly accurate. Data quality is improving, and the criteria are now transparent. Valuation was always somewhat of a black box."
Gerritsen cites some companies that would make certain professions redundant. He points to Humble, originally a maintenance company, which has developed a comprehensive digital platform for smart building management, covering all aspects, including compliance. Then there's Yardi, which began as a small software company and has grown into a global tech giant in property and asset management. Additionally, Property To Market, part of Aareon, consolidates the entire chain involved in property transactions—bundled, linked, managed, and filtered on a single platform.
"With the secure and digital sharing of financial data through platforms like Okcto, the entire process of buying and selling property—including virtual tours and contract signing—can be conducted remotely. Even key handovers can sometimes be done digitally. Platforms like Area of People and Chainels facilitate communication with tenants and employees, covering both property management and practical matters for corporate and private tenants. This raises the question: what role remains for traditional brokers, property managers, and asset managers in such a digital landscape?"
GARBAGE IN, GARBAGE OUT
While AI will automate many repetitive tasks and standard data processing, Gerritsen points out that it will also introduce new, high-quality functions. “Although there will be fewer roles, they will involve more complex tasks. AI enhances our cognitive abilities but does not replace our emotional intelligence. We will still need to oversee and interpret the insights AI generates from vast amounts of data, leveraging our human judgment and understanding."
The effective use of AI relies heavily on data quality. The principle of 'garbage in, garbage out' is well-known in computer science, emphasizing the need for rigorous verification and assessment to ensure data accuracy and relevance. This includes evaluating not only the factual correctness and usability of data but also its ethical and human aspects. Data security is becoming increasingly crucial, as we need to question how data is used beyond just enhancing AI capabilities. Gerritsen: “Ethics and privacy need to be factored in. If we let those parts slip, we get disasters like the childcare allowance scandal. In the real estate field, we have also seen what misinterpretations can cause, such as the erroneous conclusions drawn by officials under former housing minister De Jonge, who drew the false conclusion when officials of former housing minister De Jonge falsely concluded that the wave of selling off properties one by one was not as bad as it seemed. While AI will significantly accelerate and improve analysis, human oversight remains essential for validating outcomes and maintaining critical thinking."
ESG AMBITIONS
As national and international legislation increasingly targets reducing the footprint of business and citizens, measuring building performance is becoming increasingly important for the real estate sector. Leaders are opting for smart tools that support them in shaping their ESG ambitions. This largely revolves around the E of environmental, such as mapping energy consumption, potential cost savings, and sustainability of buildings, for example with the Rhino tool.
In terms of governance, AI is an excellent tool for assessing whether business and operations are compliant, Gerritsen says. For the S of social, in his experience, AI is still somewhat less forthcoming. 'Social is somewhat difficult to measure, but AI can certainly play a big role in it. Platforms can be used to build communities with employees and tenants, as demonstrated by Redevco with its Urban Living initiative and Chainels with its international platform. This open and direct communication does bring with it an extra responsibility. This creates room for a new position: the community manager'.
LOCATION, LOCATION, LOCATION
AI is just beginning to unfold its potential, and Gerritsen predicts significant changes ahead. In the real estate sector, it may not happen immediately, but within the next five years. He expects AI to increasingly recognize, learn, and anticipate patterns, enabling investors to make more informed decisions for their portfolios. “Data will play a central role in these decisions. While location will continue to be a key factor, AI will allow for the consideration of many other elements. For example, AI can quickly identify risks like flooding and other environmental factors, making accurate predictions about the feasibility and success of projects."
The increasing transparency driven by AI will pose significant challenges for some smaller real estate players, Gerritsen concludes. “Family offices are more likely to opt for managing portfolios collaboratively and professionalizing with AI. Property managers may struggle but can differentiate themselves by specializing in niches and providing fast, proactive reporting for both investors and tenants. Asset and fund managers will also need to work harder to demonstrate their added value in a world where investors have access to vast amounts of detailed information around the clock.”
