Over the last year, the property sector has undergone major transformations, including the acceleration of technology adoption. These changes have put a brighter spotlight on proptech startups looking to innovate in the sector.
A new report reveals details on the Canadian PropTech landscape, examining the key players, emerging trends, and insights into how the Canadian real estate industry is transforming.
Out of 300 startups surveyed, approximately 60 percent are in the early stages of their growth.
The report comes from Proptech Collective, a group of real estate professionals, technologists, and entrepreneurs, with partners including PwC, the Business Development Bank of Canada, and Alate Partners. The data in the report is based on several sources including Pitchbook, Crunchbase, Alate Partners, and interviews conducted by the Proptech Collective.
According to a 2020 report from PwC, the real estate industry was on the verge of “widespread proptech adoption” prior to the pandemic. A similar report from KPMG identified digitization as a key trend in the real estate industry.
“One of the biggest legacies of this pandemic will be the acceleration of digital transformation,” KPMG said. “The impact of digitization on asset classes such as office, retail and leisure space cannot be underestimated.”
Proptech Collective’s report also noted that COVID-19 has accelerated the adoption of technology in both the real estate and construction industries, meaning Proptech startups are playing a key role in the future of the “physical space.”
CEOs the group spoke to indicated the effects of the pandemic are here to stay, and that startups have the opportunity to simplify and digitize existing processes.
According to the study, out of 300 startups surveyed, approximately 60 percent are in the early stages of their growth. Sixty-seven percent of proptech startups in Canada were founded after 2014, and of the startups studied, 59 percent are at the pre-seed, angel, or seed stage of their growth.
The report noted that these early-stage companies are drawing capital from large investors in both Canada and the United States, including FJ Labs, which has invested in Properly and Tread. Some of the most notable Canadian proptech investors include Alate Partners, Groundbreak Ventures, and Greensoil PropTech Ventures.
Four out of five Canadian proptech startups are located in what the report called Canada’s top five hubs: Montreal, Toronto, Vancouver, Calgary and Kitchener-Waterloo. Notably, nearly half (46 percent) of all Canadian proptech companies are based in the Greater Toronto Area.
Among the most-funded proptech startups in Canada is Sonder, which has raised $698 million CAD to date, Ecobee with $203 million to date, Properly with $118 million to date, and Breather with $162 million to date, the latter notably among a certain type of proptech startups that have been negatively affected by the pandemic.
PwC’s report noted that although equity funding in proptech is projected to fall slightly to $8.4 billion USD, industry digitization has truly accelerated amid COVID-19.
Last year, Clinton Robinson, CEO of proptech startup Lane, which offers an office space communication platform and is backed by Alate Partners, told BetaKit Lane saw demand for its services double since the pandemic hit.
Proptech Collective also noted some key areas within proptech that Canadian companies are looking to innovate. These categories include building automation and IoT, with startups in these areas including ThoughtWire and BrainBox AI, and co-working space, with Breather and Flexday being notable startups.
Other notable categories include energy management (startups in this category include Parity and Ecobee) and construction tech (startups in this category include Bridgit and Indus.ai).
Real estate companies that Proptech Collective spoke to indicated there is a strong demand for analytics and platform-as-a-service as they look to keep up with the acceleration of the industry.
Venture capital investors that participated in this report noted that though the demand for tech solutions to help address issues in real estate is there, startups will require industry expertise and will need to leverage Canada’s deep talent pool in order to meet the moment.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
