Property Investment: The Intersection of Art and Technology (Part 1)
We recently had the pleasure of interviewing Mr. Kazuteru Otsuka, the CTO of Leeways a property investment venture. As a student, Mr.Otsuka travelled to France to solve artistic issues using technology and algorithms as well as conducting research on composition theories. Since returning home from France, he has been involved in many system and business developments. In 2015, while acting as the CTO of Leeways, he developed a next generation property investment platform known as “Gate.”. We sat down with Mr.Otsuka to learn more about his remarkable career, to discuss the possibilities of property investment and technology, and what role his interdisciplinary background has had on his work and research.
Please tell us about Leeways.
Kazuteru Otsuka (referred to here on out as Otsuka): Leeways is trying to expand awareness and knowledge of property investment. Most property tech services are more or less focused on user friendliness. We have an entirely different focus. The main indicator used to compare real estate is “Gross Rate of Return”, however we want to replace this with “Holding Period Return” based on data analysis. This value allows for more fairness when it comes to decision making in property investment. We hope to encourage society to adopt this value as the standard when it comes to comparing real estate. In the long run this will not only benefit real estate investment, but also realtors and the market.
How do you think the property investment industry will change due to technological expansion?
Otsuka: Real Estate is a practical field and so long as research actively progresses, and joint ownership of business-to-business data progresses, we will quickly move towards a world where humans are able to rely on calculations determined by a machine. As Ian Ayres’ Thinking-By-Numbers* suggests, we are close to a world where numbers will trump professional opinions.
(*Thinking-By-Numbers: Refers to using current data, regression analysis, and neural networks, to statistically predict events that will occur).
Jobs carried out by humans would undergo a complete change.
Otsuka: There is a debate as to whether or not machines will take over jobs previously performed by humans. However even if 99% of decision making was to be taken over by machines, there will always be that 1% that only humans can fulfill, so I don’t think unemployment is an issue. For example, you wouldn’t want to leave a life or death decision up to a machine. You would want a human doctor to make that decision. Even if driving became completely automated, I don’t think steering wheels will disappear. It is not a game of musical chairs where it is one or the other, but rather a role change. Therefore people need to seriously reconsider how humans and machines intersect, and I believe that starts by re-evaluating what it means to be human.
How does your property investment matching platform “Gate.” operate?
Otsuka: Ideally, professionals in the property investment field would rely on the platform to assist in decision making, while the professionals themselves would compare invested properties and assist negotiations to come to an accurate investment decision. There are plenty of tools in place on the business side, that can accurately compare profitability. The standard indicator of property investment, the Gross Rate of Return, will operate even if you were to ignore an empty room and change the rent. “Gate.”, in comparison, uses recurrence quantification analysis of over 40 million cases to determine future rent decline and vacancy rate to, in turn, determine future cashflow of a property and uses this as a guide during the selling and purchasing process to simulate investment results using “Holding Period Return” as its basis. At first glance this can seem quite confusing, however our goal is to develop an intuitive interface that is easy for anyone to use. On the other hand, Leeways is for property investment professionals, so it is a hub of specialized jargon and knowledge.
How did you come up with the idea for “Gate.”?
Otsuka: I was extremely interested in the possibility of changing people’s sense of values. It is evident that the standard process was prone to errors, and so I wanted to use technology to make decision making more accurate, safer, and more fair. Moreover, real estate is a risky industry, and some people put all their eggs in one basket. They come out loosing everything because of misinformation or not enough information, and I think that’s wrong.
Continues in Part 2
