A nonprofit operating at the intersection of real estate, technology, and entrepreneurship in Canada this month released its third annual report on the state of prop-tech across the nation.
Proptech Collective’s 2023 report reveals an array of insights into Canada’s prop-tech landscape, from where and how ecosystems are flourishing to who’s raising the most capital.
There are now more than 500 prop-tech firms founded in Canada, according to the Collective report, with 75% of firms founded within the last decade, and more than 30 established within the last year.
The need for prop-tech startups is on the rise, argues Stephanie Wood, who headed the report for Proptech Collective.
“As the global real estate market is faced with challenges related to both interest rates and sustainability, innovation is critical to pave a positive and stable path forward,” stated Wood, who also serves as Vice President of Alate Partners, a Toronto-based investor in Canadian prop-techs. “Proptech founders, VC investors, and real estate leaders must lean on technology to become more efficient and build more resilience.”
Frank Magliocco, Real Estate Leader for PWC Canada, agrees, stating that tech-forward solutions is necessary given current economic conditions.
“At a time of industry headwinds ranging from interest rates and financing issues to rising construction costs and productivity challenges, the need to adopt digital solutions that increase efficiencies and grow revenues has become even more pressing,” he said.
But can a digital transformation of Canada’s real estate industry be achieved?
Wood believes that “Canada has the talent and means to do so,” with evidence backing up her statement found in the Collective report.
“Reflecting on the last three editions, it’s clear that the sector has experienced a surge of interest and we’re proud of the market’s growth, which has continued to position Canada as a hub for real estate innovation,” she explains. “This year’s report is a celebratory look back on the growth and achievements of the sector, but also a critical look forward at what’s needed to be as competitive as possible.”
According to the report, four major trends are set to write the next chapter of proptech growth and innovation in Canada. These areas of interest are AI, Affordability, Integration, and Decarbonization.
Artificial Intelligence
Proptech founders are excited about the transformative potential of AI, with many possible benefits appearing on the horizon within the sector.
“Generative AI is activating innovations in real estate and property software,” says Via Pant, Chief Data Scientist for PwC.
For example, predictive maintenance integrated with IoT systems “promises to revolutionize how we preempt and tackle potential issues within properties,” according to Pant.
“From predicting ongoing needs to offering insightful solutions before problems escalate, this technology forms the cornerstone of a proactive approach to property management,” he said.
Furthermore, a capacity to create tailored content for hardware enhances virtual experiences and drives engagement, “setting the stage for a new era of immersive interaction with properties—from tours to construction safety on-site,” Pant says.
As synergy between Gen AI and real estate unfolds, “the industry stands on the brink of a transformative journey, where efficiency, sustainability, and innovation converge to redefine the very fabric of how properties are built, managed, and transacted.”
Affordability
Housing is only practical when people can afford it—a notion which has become top-of-mind in Canada, where a cost-of-living crisis has an alarming number of Canadians struggling to buy a home, let alone pay their mortgage down.
“Escalating property prices have made traditional homeownership less attainable for many,” laments Vancouver entrepreneur Daniel Dubois, who founded real estate startup Key.
Dubois believes innovative ownership models “can provide a viable pathway to enter the real estate market” in Canada.
“The success of collaborative consumption models in various sectors has positively influenced the acceptance of alternative financing concepts,” he believes. “As people become accustomed to sharing resources and assets, the idea of co-owning a property has become more appealing.”
Other solutions proptech are building include alternative financing methods and the streamlining and scaling of building and installing modular and prefab units with greater cost efficiency.
Integration
As a wide variety of proptech startups tackle a vast array of challenges across the country, many have found it difficult to establish and maintain success on their own.
Collaboration between proptechs has been commonplace in Canada lately, with founders “thinking about where other platforms can plug in to their solutions,” according to the report.
For example, API integrations are top of mind when founders are building out platforms, especially as it pertains to integrations with enterprise resource planning systems.
Strategic partnerships continue to play a major role in advancing the ecosystem, the report found.
Sustainability
As companies look to remain on the good side of increasingly aggressive climate regulations, the concept of sustainability is woven throughout the core of today’s proptech firms.
Innovation and technology appear necessary ingredients for any solution as the construction industry—while essential to any growing population—remains a high-polluting field.
Derek Goring, chief executive of Northcrest Developments in Toronto, says that “emerging advancements” in technological areas such as fabrication offer beacons of light toward a future eco-friendly constriction.
“Innovations in what we build with and how we build will be critical to addressing challenges,” the CEO believes. “Materials including wood and other biomaterials, low-carbon concrete, and repurposed materials meaningfully reduce embodied carbon and waste.”
Goring also expects the rapidly rising use of robotics and automation to eventually reduce project costs and accelerate construction timelines.
Check out our coverage of last year’s report here.
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