Private real estate investors who don’t embrace AI are at risk of falling behind their peers who do, Guy Zipori, the CEO of Skyline AI, said.
Zipori told the audience at the PERE America conference this week in New York, hosted by PERE, an affiliate publication of Venture Capital Journal, that it is become increasingly important for private real estate investors to embrace AI tools to help them make quicker and more informed decisions when investing.
“This will be the way to do real estate investments,” Zipori said. “The people who are now straying behind, who aren’t the early adopters, will stay behind.”
New York-based Skyline AI uses AI to help real estate managers narrow down potential properties on the market based on valuation data and the property’s potential to help investors find their best options. The startup closed on an $18 million Series A round in 2018 from Sequoia Capital, TLV Partners and JLL Spark.
Zipori said the typical real estate manager allocates about 1 percent of its budget for technology innovation. That is up from 0 percent a few years ago, but the industry still has “a long way to go” before reaching a suitable level of tech investment, he said: “It’s very important to be open to [AI]. It’s very important to understand how you can benefit from that.”
Skyline AI joins many other startups that are looking to use AI to make real estate investing more tech-enabled and calculating property values more streamlined.
Delft, Netherlands-based GeoPhy, which also uses AI to determine real estate valuations, closed on a $33 million Series B round earlier this year led by Index Ventures. Inkef capital and Hearst Ventures are also investors.
CityBldr in Seattle also looks to use AI to determine a property’s valuation, but provides predictions about what the property will sell for compared to its value. It connects sellers with commercial real estate buyers.
CityBldr closed on a $4.3 million seed round in 2018 from undisclosed investors.
Advancements in real estate AI extend into residential market as well. There are startups like Localize.city which uses the technology to help buyers make more informed decisions on a home or rental by providing information on things such as past building violations and nearby construction.
The startup closed an $8 million Series A round in 2018 with capital from multiple high-net-worth individuals, including Avigdor Willenz, the founder of Annapurna Labs, and Zvi Limon, a partner at Magma Venture Partners.
Zipori said that due to success in the real estate industry being built on relationships, it will never be completely taken over by AI, nor does AI make better decisions than humans, but rather, it just helps humans make more informed choices.
“I don’t believe technology will replace people’s work in this environment, at least in the next few years, but people utilizing advanced technology will replace people that are not utilizing advanced technologies,” Zipori said.
The real estate tech industry is expected to surpass $4 billion in funding by the end of 2019, according to research from CB Insights.