(Bloomberg) -- Luxury real estate brokerage Douglas Elliman Inc. is betting artificial intelligence can expand its business beyond buying and selling homes.
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On Wednesday, Douglas Elliman announced a companywide AI overhaul, saying it will launch a new business, Elius, that aims to turn decades of proprietary real estate data into AI-powered products and market intelligence the company will sell to external customers. The brokerage will also use Google Cloud's AI technology to automate some of its operations.
"We're going to transform ourselves into a technology company," said Michael Liebowitz, Douglas Elliman's chief executive officer. "The traditional brokerage, as we know it, must change."
The initiative is intended to reduce operating expenses over the next two years as AI automates some work across finance, marketing, commissions and other corporate functions. Liebowitz said the company expects a "significant amount" of headcount reduction but declined to estimate how many positions could ultimately be eliminated, adding that the company won't know the extent of those reductions until the technology is fully deployed.
Shares of Douglas Elliman were down 17% this year through Tuesday, compared with a gain of 20% for the Russell 2000 Index of small cap companies.
Liebowitz said the broader real estate industry will need fewer real estate agents as AI becomes more capable, though he believes luxury transactions will continue to require experienced human advisers.
The strategy comes as brokerages face a slowing housing market and intensifying competition. Rivals including Compass Inc. have introduced AI-powered tools for agents while also expanding through acquisitions. Liebowitz said Douglas Elliman aims to differentiate itself by building its own AI platform while remaining an independent company.
"The direction was really to be part of the future and not merge our way out of where we are now," he said.
Elius is at the center of the new strategy. The company said the AI platform will use data from its brokerage operations and a roughly $27 billion development-marketing pipeline to provide human agents with pricing intelligence, market insights and workflow automation.