Overturning real estate appraisal standards: A Switzerland-based revolutionary AI assessment service arrives in Japan

When selling a home, an RE appraiser is employed to determine the value of the home. However, how is one to know if the quoted price is appropriate, and if the home will actually sell for that amount?
“In fact,” said Mr. Tanaka, “the real estate business in Europe had also been criticized for its lack of transparency. At that time, no efforts were made to introduce information technologies (IT) or AI. PriceHubble first determined to change this situation and to bring transparency to RE prices.”

Mr. Tanaka stated that a key aspect of PriceHubble is that it provides visual materials for understanding RE prices. “Our idea was not only to present RE prices themselves in a visible form, but also quantifications related to life in the area of the house, population trends, and so on.”

At the home base in Switzerland, the company quickly received the support of key players, including in the financial industry. Credit Suisse, Swiss Life Holding AG, and other major financial organizations became PriceHubble clients. The company next developed its clientele in France, Austria, and Germany.
“France was making special efforts to bring transparency to RE transactions,” Mr. Tanaka stated. “It was big news in Europe when French government organizations began to adopt our services. In Germany, no RE transaction data was in the public domain, and getting a grasp of actual prices was difficult. Yet, after PriceHubble started performing big data analyses and publicizing appropriate prices, financial institutions and real estate companies started using our services.”

In February 2019, the company was launched in Japan.
“One of the reasons was surely that the founders of PriceHubble were fond of Japan. However, the key factor was the large RE market in this country. Another unique characteristic of Japan was its reliable and abundant data.”

AI assessment is used for condominiums, single-family dwellings, and so on. Databases are created from national data, including census data and private company data available on the Internet. AI techniques are then used to organize and find rules for these databases. Not only are current prices used in assessments, but also projections and trends for future prices.

“Currently, we quantify elements for determining future prices, and compute related scores. We add this information to data showing current prices for real estate sales in the vicinity, and so on. Elements considered include good RE sales within the building and in the area, the location of supermarkets and convenience stores, and so on.”

Education is also an element, but education level at schools is not the main question. The idea is that the more schools exist in an area, the better its living environment. This is linked with the ease and comfort of living in the area, and is also related to future price trends.

“We not only look at the restaurants in the area, but also calculate points for ratings by restaurant users found on user sites and so on. Again, our idea is that RE prices will rise in an area that has good restaurants.”

Points are also calculated for other local services and elements (including medical services, leisure facilities, and commuting time (such as walking distance to the nearest train station)). Scores incorporating these numerous dimensions are used in future-price calculations.
“Switzerland has a lot of environmental data, and noise levels are also scored and visualized. One also gains an understanding of differences between daytime and nighttime levels. Scores for the scenery, amount of sunshine per day, and so on are also included.”

Data from the Internet is analyzed, and a “picture” is obtained as to how convenient and comfortable it is to live in that location.
“There are also some countries that publish actual transaction data, and countries where one can see the status of land buying and selling as well.”

PriceHubble started its system development in a joint industry-academic collaboration with Albert Einstein’s former university, ETH Zürich (Swiss Federal Institute of Technology in Zürich). The McKinsey partners who created the company were deeply involved with advanced technologies, and employees have come from GAFA (Google Amazon Facebook Apple) companies, as well as graduates from Stanford and Harvard Universities, and more.

“I was astounded at the high level of employees when I visited the home company in Switzerland. I clearly sensed that here was a technology-oriented firm. There was also an individual with a doctorate degree in statistics!” Currently, the company employees 80 persons worldwide, which Mr. Tanaka emphasizes cannot be found elsewhere in AI assessment companies.

“Although we are high-tech, it is only people who can share their willpower and vision for business, and take action once they understand and agree. This is one of the things that I personally take pride in, and can advocate to others. I worked freelance for a long time, in a world where only I was responsible for evaluating the fruits of my work. The fact that I am now absolutely certain that we can and do make our customers happy and satisfied serves as my major motivation.”

PriceHubble aims at the provision of platform services. Because the company is not involved in buying and selling RE, it is able to maintain its fairness and neutrality. It has been 18 months since the establishment of PriceHubble Japan. Over that time, there has been a steady increase in the number of customers as it proceeds with its business-to-business-to-customer (B-to-B-to-C) model.

The company’s clients include RE agencies and sales companies. Of course, the RE business is just as interested in knowing appropriate prices as its customers. The same is true for RE developers, who need a firm grasp of the key indicator of how much their new condominiums and buildings will sell for.

“A strength of PriceHubble is that it can assess prices even for a building that is not yet built. We can determine the income of a property starting from the vacancy stage. From that point, we can conduct price simulations. In France especially, we are greatly expanding our business with orders from developers.”

Condominium management companies also have a need for our services. The owners charge these companies with renting, leasing, and operating properties. In their dealings with their customers, it is difficult for these management companies to determine how much rent to charge.

“Owners, of course, want rents set as high as possible. Yet if the rents are too high, then there will be fewer tenants. Both sides need to understand and agree to prices, and it is here where RE AI assessment brings tangible benefits.”

Financial institutions are another industry with a keen interest. They need to be able to make accurate evaluations of the collateral value of properties, as it can have a large impact on their bottom line. This is even more true in regard to future values. Nevertheless, the main business of financial institutions is lending; they are not RE assessment professionals. There is thus a need for them to actively utilize AI assessment systems, and this need is especially true for regional banks.
“For this, PriceHubble has agreed a partnership with Information Services International-Dentsu Ltd. (ISID), a vendor that provides solutions to financial institutions. We believe we can better develop this business by packaging our services with theirs.”

Meanwhile, the SaaS model comes in a variety of types, including pay-per-service, monthly fees, and other fee payment schemes.

From the time of its founding, PriceHubble Japan has been a member of EGG JAPAN. We inquired about the reasons for this.
“Although we are just a start-up company, our clients are some of Japan’s representative large companies. Having an office in the central Marunouchi district is a huge plus for us. Tokyo Station is right next door, which makes transport to and from our company extremely convenient. This makes it easier for us to invite our guests to visit us.”

In addition to full-time employees, there are currently three interns with the company, graduate students from the University of Tokyo and Keio University. Their job is to format Japanese data so that the Swiss headquarters can also read and use it.
“I believe that this office, its location and its setting, is a leading attraction for potential interns. Our interns have expressed how fortunate they are to work in this wonderful environment. It seems that their parents are also pleased!”

PriceHubble has also participated in events hosted by EGG JAPAN. Mr. Tanaka says that these were valuable learning experiences. Before the COVID-19 pandemic, EGG JAPAN also provided popular collaborative spaces for meeting with and entertaining guests, all while looking out on the lovely scenery of the Marunouchi area.
“The real estate business has maintained its vitality even under the current adverse circumstances,” states Mr. Tanaka. “This has helped to boost our business as well.”

He adds that PriceHubble will continue to pioneer transactions with major companies, and intends to develop its business on a major scale.
“The more data is used, the more data becomes available. The uses and applications of data also expand. We believe that our data services can serve a large number of parties as shared yardsticks and benchmarks.”

Another benefit of more and more data is the increased accuracy of calculations and assessments. This will also be linked with increased transaction activities. “We intend to move forward in that direction,” says Mr. Tanaka.

Truly, there seems to be no end to the vigor and possibilities of PriceHubble.