Construction is amazing. High-tech structures reach through the clouds and defy earthquakes. Beautiful architecture improves the livability of our cities. Millions of homes provide shelter to billions of people, giving them a place to raise families and live out their lives. Global real estate is valued at around $300 trillion (Source: Savills).
Construction is dangerous, difficult work that is plagued by human error and still runs off 2-D plans. Skilled labor is in short supply, project schedules are tight, and complexity is high. Real estate transactions are glacially slow and result in ridiculous piles of paperwork. The sector is ripe for change.
If you've overseen a construction project, or a home remodel, you know that mistakes and rework are all too common. Plans are imprecise, poorly specified, or impractical to build and creative workarounds are required on the job site. Construction is dirty, demanding, and sometimes inexact work that's prone to error. As testament, note how baseboards, light-switch covers, and door jambs all hide imperfections. Common estimates are that rework accounts for about 10% of the cost of most construction projects. With industry profit margins at 4–5%, that's significant. The number one challenge reported by 80% of construction companies is a limited supply of craftworkers (Source: AGC/FMI risk management survey, 2019). One in five deaths in private industry occur in the construction business (Source: U.S. Department of Labor). In 2017, there were 14 deaths in U.S. construction per day.
Markets operate more efficiently when transaction friction is reduced or removed. When stock exchanges left paper behind and moved transactions onto computers, global markets flourished. With the emergence of internet trading, broker fees dropped from hundreds of dollars to 10 bucks or less. Trades execute in fractions of a second. Contrast this with the real estate industry: In 2018, the average mortgage-financed U.S. home purchase took 45 days. Real estate transactions in the United States are horrible. To buy property you must sign a stack of paperwork two inches thick and grease the palms of many intermediaries along the way. The process isn't much different in other countries.
Purchases incur significant fees, errors in public records are common, bureaucracy is high, and transactions move at a snail's pace. High fees and a paper-based workflows deter sales and depress real estate markets.
Autodesk, the pioneer in generative design, makes a suite of architectural design tools that allow architects to enhance their design sensibilities with the smarts of an AI. Architects determine the high-level goals and constraints of a project and use computer-based tools to automatically generate hundreds or thousands of design options. The tools sort the options, assess each against project goals, and guide the designer toward optimal solutions. Architects co-create buildings with the AIs. The AI gives the architect greater freedom to explore radical ideas. The design tools find the best ways to bring those ideas to life. This approach enables designers to explore a far wider range of design options than they could alone.
Business Insight: Collaborative AI Increases Creativity and Boosts Productivity
Collaborative AI, in the form of generative architecture design, has proven a powerful tool. It enables architects to achieve more, and to produce more thoughtful, bold, and creative designs. The result is more beautiful architecture, more efficient buildings, better sustainability, lower cost, less waste, and reduced project times. Collaborative AI will show up in every industry. It has the potential to boost the creativity, impact, and productivity of most knowledge workers. Watch carefully for developments in your industry and get ready to embrace collaborative AI as a way to turbocharge your workforce.
Most architecture is designed with 3-D software, yet buildings designed with a modern Building Information Model (BIM) are still described to construction workers using flat, two-dimensional blueprints. Augmented reality (AR) headsets keep plans in three dimensions and project them onto physical space to show workers where things need to go. This aids comprehension and reduces errors. AR headsets are suited to all phases of construction but are particularly useful for mechanical, electrical, and plumbing (MEP) systems. Seeing exactly where an air duct needs to go is way easier than trying to interpret 2-D paper projections.
Site inspection is a manual task. Building measurements are taken and compared against printed plans. SRI International's AR-based inspection system tracks the location of an inspector as they move through a site. The inspector visually compares what is being built against plans from the BIM, which are overlaid in her field of view. The solution speeds measurement, using sensors on the headset to measure distances and automatically highlight disparities with the BIM. Blue tape traditionally used to mark the punch list is replaced by holographic markers. The inspector attaches digital photos and notes to guide rework and create a detailed record of the issue so it can be tracked to closure. As AR capabilities improve, AR headsets will become a common sight on most construction projects.
Business Insight: Augmented Reality Limits Mistakes and Helps Hands-Free Workers
The use of augmented reality, particularly to translate 3-D plans onto physical spaces, aids comprehension and makes construction workers more efficient. As the capabilities of AR headsets improve, they will provide valuable support to a wide range of hands-free workers, guiding them to perform tasks and auditing their work. Plans, visualizations, and 3-D work instructions inhabit a worker's visual perception and align directly with the work in front of them. Relevant contextual working data is presented as a heads-up display. The result: increased productivity, quicker decisions, and fewer errors.
Construction is labor-intensive, from architectural design, to building and final inspection. The industry employs many skilled workers—carpenters, electricians, plumbers, ironworkers, roofers, and joiners—and very little work is performed autonomously. In a 2019 survey, 63% of construction companies report using drones in their operations, while only 14% use on-site robotics (Source: AGC/FMI risk management survey).
Robots are starting to enter the construction workforce. A good human bricklayer can lay about 500 bricks each day. SAM-100, a robot made by Construction Robotics, lays up to 3,000 bricks in a single day. SAM-100 is a cobot designed to work in partnership with construction workers. A worker loads bricks onto the conveyor belt that feeds SAM-100's bricklaying arm, while another worker strikes the wall to remove excess mortar. SAM-100 is fast, but messy.
Hadrian X, a robot made by Australian innovator Fastbrick Robotics, lays bricks like a giant 3-D printer, using a 30 m (90 ft) boom. Hadrian X self-stabilizes and lays bricks with precision, even in windy conditions. It lays a combination of standard and large bricks, 12 times larger than standard house bricks, and fuses them together with adhesive that dries in just 45 minutes. The result is a home with improved thermal and acoustic properties over traditional mortar. Walls for an entire house can be built in one to two days. The process is cheap, creates no on-site construction waste, and is much safer for workers.
The Advanced Industrial Science and Technology (AIST) institute of Japan is developing a robot to hang drywall. The catchily named HRP-5P robot is not as fast as humans but is effective and methodical. Designers gave the humanoid robot additional limb joints to aid it in its work.
Construction drones conduct site surveys, oversee work, track worker productivity, assess progress to goals, document project milestones, perform safety audits, and ensure compliance against plans. These human-piloted drones will soon become autonomous, roaming sites and gathering data with a range of sensors. Machine vision technology will watch for safety violations—improperly secured ladders, trip hazards, and failure to wear personal protective gear. Laser scanners and other sensors will compare the built environment against plans and schedules, highlighting anomalies and project slips. Some construction companies use drones fitted with FARO laser scanners to compare construction progress with the building information model (BIM). Regular inspections matter. The sooner issues are discovered and addressed, the more money can be saved. Better to find a wall is misaligned before you install ducting, plumbing, electric, drywall, and paint on it.
Early detection and resolution of safety issues will save lives. Boston-based construction firm Suffolk is testing technology to predict where accidents will happen. The predictive AI, named Vinnie, was trained with 10 years of accident data and images of site safety hazards donated by a group of competing construction firms. Early results are promising. Vinnie predicted one in five safety incidents, a week ahead of time, with 81% accuracy. Technology partner SmartVid claims the system reduces incident rates by 30%. The drone also performs inspections, cutting 60% off the time Suffolk spends tracking progress and documenting milestones.
Additive manufacturing, better known as 3-D-printing, is coming to construction. Giant machines “print” with cement instead of ink. Icon's latest Vulcan II cement printer can build a 650 sq ft (60 m2) home in less than a day for just $10,000, with prices predicted to drop to $4,000 in the future. It has a build capacity 8.5 feet high by 28 feet wide (2.5 m × 8.5 m), enabling it to print homes of up to 2,000 sq ft (190 m2). Vulcan II builds resilient structures using a proprietary material named Lavacrete and lays 7 inches (17 cm) of material every second. The printer is delivered on a trailer, requires no on-site assembly, and can be operated by as few as four people. Icon claims their printer cuts construction costs in half. Their first commercial project is a 3-D-printed community, built to house more than 400 people and serve low-income families. 3-D-printed buildings increase design freedom, reduce build errors, and use less concrete than traditional construction. Dutch researchers are experimenting with 3-D-printed structures made from biobased plastics. These biomaterials can be either nonbiodegradable or biodegradable, enabling the sustainable construction of either permanent or fully recyclable, temporary structures suitable for disaster relief.
Mortgage brokers and real estate agents always need to hustle for business, especially when the market is slow. AI embedded inside customer relationship management (CRM) tools guides brokers on their outreach strategy, prioritizing leads, and even forecasting the likelihood a deal will close. Many agents rely on their networks for leads. North Carolina–based real estate AI company First sifts through a real estate agent's personal network and predicts when people will be ready to sell, sometimes months in advance. First analyzes more than 700 insights sourced from data brokers—spending patterns, employment status, income history, credit status—to spot changes that signal a potential home sale. This allows agents to prioritize outreach and beat competitors to listings.
The natural language capabilities of AI speed data entry, automatically extracting customer data from documents, even if those documents aren't arranged in a standard format. AI ingests a document and identifies names, addresses, social security numbers, income, investment details, and more. Natural language processing analyzes the sentiment of incoming emails to highlight urgent issues or an unhappy client. Chatbots, like OJO and Roof.ai, answer real estate questions and help with home searches. For outbound marketing, AI recommends marketing mixes and outreach strategies. It ingests social media feeds to read thousands of online reviews and summarize them in natural language. AI even ingests the social media of competitors to make recommendations on changes to marketing strategies.
UK-based Proportunity uses AI to accurately predict the future value of London homes. They partner with first-time buyers of homes that their AI gives high future valuations. Proportunity supports buyers by taking an equity stake of up to 15%. This allows the buyer to afford a more expensive property than they could on their own. It also reduces the loan-to-value ratio for a mortgage, which allows buyers to secure a lower interest rate from lenders. When the buyer sells or refinances their home, they repay the equity to Proportunity, who make a profit based on the increased value of the home.
Skyline is an AI investment manager that analyzes 50 years of commercial real estate data to identify emerging trends and pinpoint locations that are about to see market gains. They analyze owner and asset behavior to identify investment opportunities, including arbitrage deals, off-market deals, predicted foreclosures, and mismanaged properties that could be performing better.
Disruptors Zest Finance and Underwriting.ai sell AIs that assess the risk of potential borrowers. Analyzing hundreds of data points, instead of the 10 or so that human underwriters consider, these AIs find low-risk borrowers that would not qualify under standard methodology, expanding the marketplace without increasing financial risk.
Fintech innovator REX uses AI to price homes and match sellers with qualified buyers, simplifying the sales process and replacing real estate agents. REX robots show houses and interact with potential buyers to answer questions. REX charges 2% to cover both sides of the real estate transaction versus the 6% fee common to most U.S. residential real estate sales. Not everyone will want to buy a home from a robot, but the economics provide a compelling alternative.
Real estate transactions in the United States are notoriously overcomplicated and painful. Home buying is a stressful exercise that involves obscene amounts of paperwork, much of which you will never read, and payments to intermediaries that help broker a deal with a seller you will never meet. You work with a real estate agent, mortgage broker, escrow company, credit-scoring agency, property appraiser, home inspector, notary, title company, and maybe a lawyer. No wonder people hate this process. The escrow company holds money in good faith as a down payment on the deal. The credit-scoring agency checks that the buyer is likely to make their mortgage payments. The home inspector checks that the home has no significant, undeclared issues. The appraiser ensures that the home is worth the price being asked. The whole, painful process is designed to reduce risk and establish trust.
There is good news. Technology will bring the day when we are approved for a mortgage and buy a home with the single click of button. Innovators will use Blockchain and AI to cut out intermediaries and automate, or semi-automate, every step in the buying process. Mortgage applications will be streamlined and automated as buyers grant one-time access to relevant financial information stored on a Blockchain. Data accuracy is ensured, and sensitive financial data is shared easily between entities, speeding approvals. Blockchains will verify ownership and transfer titles, all while maintaining transparency and limiting fraud. Escrow and title exchange will be handled via smart contracts. Documents will be certified electronically without need of a notary.
Blend uses Blockchains for secure document transfer during the loan origination process. They claim their platform shaves 7–10 days off the average loan closing. Ubitquity, a Blockchain-based platform for real estate record keeping, is used by title companies, municipalities, and others to establish clean records of ownership. Imbrex is a Blockchain-based, community-owned real estate listing portal. Users maintain control over their data and earn rewards for contributing information to the platform.
Business Insight: Blockchain Limits Fraud, Speeds Collaboration, and Removes Intermediaries
Industries that involve contracts, suffer layers of intermediaries, or have complex process flows between multiple entities will benefit from the use of Blockchains. Smart contracts enable agreements to be captured in code and executed automatically when conditions are met. Blockchain creates trusted data sources, aids secure and speedy sharing of data between entities, and enforces rigorous process flows. This limits fraud, automates information flow, and eliminates risk. Intermediaries, which are there to mitigate for a lack of trust, are no longer needed.
Is everybody in the real estate market out of business? Absolutely not. Buying a home is, for most people, the biggest purchase they will make in their lives. Many people will seek a trusted human being to guide them through the stressful process. As Blockchains reduce paperwork and complexity in the house-buying process, the value offered by agents and brokers will naturally evolve. Filling out paperwork and writing up contracts will become a smaller piece of their value-add. Mortgage brokers and real estate agents will pivot to a primary focus on educating buyers and boosting their confidence in the decisions that they make. These are tasks that mortgage brokers and real estate agents already know how to do well.
Business Insight: Technology Is No Substitute for Human Connection and Reputational Trust
As the mechanics of loan origination and home buying are automated, mortgage brokers and realtors will need to focus on service, trust, and building the confidence of clients. Providers that deliver perfunctory service, or act only as gatekeepers to funding, will lose their business to pure-play digital services. Successful agents and brokers will focus on customers who demand the human touch: exquisite customer service, trusted advice, emotional support, and encouragement. Buyers need to feel confident in their choices. Ultimately, that is what brokers and agents are selling. Technology can't automate empathy. In an automated world, human connections and brand trust will matter more than ever, in every industry.
Very few people can afford to invest in commercial real estate. Tokenization, using Blockchains, democratizes access to real estate investment. Atlant, RealCrowd, and CrowdStreet crowdfund commercial real estate projects and make them accessible to individual investors. Atlant converts properties into tokens based on floor space: 1 mm2 = 1 token. They check that a property's title is clean and create a new holding company designed solely to take ownership of the property. Atlant tokenizes the holding company, dividing the value of the company into tokens, based on the size of property. This forms a direct relationship between the number of tokens and the value of the property. Tokens traded on Atlant's trading platform, via a PTO (Property Token Offering), generate capital. Once all the tokens are sold, money is transferred to the seller. Investors profit from rental income and increases to the property's value, which are reflected in the price of the token. CrowdStreet enables an individual investor to buy a stake in a single property or a blended portfolio of properties, a bit like a mutual fund for commercial real estate. Minimum investments are as low as $25,000. Not for the faint of heart, but still substantially lower than having to stump up millions to buy an entire shopping mall yourself.
Business Insight: Democratize Investments Using Tokenization
By tokenizing assets, start-ups are democratizing the investment world. Inspired by early success in the real estate sector, crowdfunding entrepreneurs are entering new investment categories and creating new financial instruments aimed at individuals as well as institutions. Aurus, Digix, and GoldMint tokenize gold. Natixis and Trafigura tokenize crude oil. Breaker tokenizes entertainment rights. Other companies are working to tokenize stocks, works of art, rental properties, music, and patents so they can be bought and sold on markets just like anything else. Investment is being democratized. How will your company play a role, or take advantage of new investment opportunities?
Dharma Labs, ETHLend, and Homelend use Ethereum smart contracts to enable crowds of individuals to make loans and underwrite risk. Homelend's mortgage crowdfunding platform brings people together to collectively lend money to homebuyers. Homelend claims they will cut loan origination times from a typical 40–50 days to just 20 days. These new peer-to-peer lending platforms may someday democratize lending and reduce the need for large lending institutions.
Ultimately, AI and Blockchains will automate and speed every step of the lending and buying process. Empowered consumers will choose between full-service mortgage and real estate services and low-cost, streamlined digital services that lack the human touch. The day of the one-minute, paperless mortgage cannot be too far away.