The impact of PropTech in Canada

The property technology (PropTech) sector has experienced tremendous growth across Canada over the past decade with new companies steadily joining in the mix and venture capitalists (VCs) eager to get behind the next big thing.

With the emergence of AI and the advancement in other technologies, despite the challenging market conditions we experienced in 2023, a new report from PropTech Collective states that there are now approximately 500 PropTech companies in Canada. Forty per cent of these companies were founded in the last five years and, combined, they have raised more than $1.5 billion of funding.

Canada key region for innovation

The report adds that Canada is becoming a key region for real estate innovation. With a growing tech ecosystem, as well as an influential real estate and construction industry, the country is creating an incredible home for the next generation of PropTech startups.

PropTech is a complicated venture and understanding different real estate personas, from investors to end-users, is vital to building credibility in the industry. Real estate is “fragmented by location, asset type, property characteristics and more,” PropTech Collective notes, and the right capital provider must be used depending on business models. Many real estate companies have tried to develop in-house technology but with mixed results, pushing many to evaluate what tech they’d like to own and where they’d rather partner with third-party solutions.

Through conversations with PropTech founders, real estate leaders and investors, the report lays out four key trends that stood out as they look at 2024 and beyond: Decarbonization, affordability, AI and integration and consolidation.

Climate change remains a hot-button issue and there is a strong emphasis on integrating environmental, social and governance (ESG) principles into business planning. Real estate industry leaders are aligning their strategies to focus on carbon-reduction initiatives, while VC firms are actively looking at opportunities at the intersection of climate tech and PropTech.

Adopting new technology

Housing affordability is being tackled at every level and PropTech leaders recognize the role housing access has in shaping the future of the country. To address this, PropTech advancements have been made in co-ownership platforms, purpose-built rental and modular construction.

AI really came to the forefront in 2023, and the PropTech sector is embracing it. It has already been used for architectural design and machine learning, but the possibilities are endless. PropTech founders are leveraging it internally to help scalability, while real estate leaders are using it for development planning, performance analysis, risk assessments and more.

As the industry has matured, there’s been a greater shift to consolidation. Companies have been more open to collaboration and are looking to create partnerships and integration with other platforms to provide a more holistic experience for customers.

Real estate leaders have recognized that they cannot take their foot off the pedal on adopting new technology. Educating the market and working with the varying regulatory environments are hurdles to overcome, but there is a lot of optimism in the innovation that will directly impact one of the largest sectors of the Canadian economy, and in turn, benefit purchasers from an elevated real estate experience.