Proptech firms hit ‘reset’ as real-estate industry struggles

New property technology (proptech) companies regularly approach Colliers Canada with tools they believe could revolutionize construction, building management or energy conservation, according to a company executive.

Proptech refers to digital platforms aimed at supporting the real-estate sector. In Canada, the market is growing quickly, with more than 530 startups tracked in 2024, according to a recent report.

“Proptech can have a big impact in improving revenue as well as saving costs, but it’s growing so fast [that] it’s hard to keep up with,” says John Duda, Colliers Canada’s president of real-estate-management services. “Our clients were saying they’re overwhelmed and don’t know where to put their money.”

Tailoring to suit

To help clients with their buying decisions, Colliers Canada set up an internal program, called the Colliers PropTech Lab, which allows its property management teams to assess different tools and advise clients on the ones they think would be best-suited to their buildings.

Over the past three years, the program – which operates through an online portal – has evaluated more than 500 technologies, ranging from artificial-intelligence (AI) design apps to air-quality sensors and whole-building management systems. “We offer feedback to the companies explaining why a product might be a great fit for one building, but less suitable for another, depending on building class, location and the specific priorities of the property manager,” Mr. Duda says.

Of all the tools assessed, he adds, more than 90 per cent have shown potential for cost and time savings, and many have piloted tests in Colliers’ buildings at no charge to the owners.

Proptech’s next chapter

The drive to distinguish the most useful technologies for real-estate professionals is part of proptech’s evolution. An annual report from Proptech Collective – a national industry organization – shows the sector is strategically advancing despite a challenging fundraising and business environment.

Canadian proptech startups faced a tough funding year in 2024, collectively raising about $300-million in venture capital (VC) – 62.5 per cent lower than the $800-million committed in both 2023 and 2022, respectively. But Stephanie Wood, vice-president at VC fund Alate Partners and founding team member at Proptech Collective, says funding was down across the entire technology sector and not just within proptech.

In 2025, the industry is set to mature as it embraces consolidation through mergers and acquisitions and becomes more efficient through emerging AI technologies, which are poised to reshape the sector, Ms. Wood adds.

“Proptech has gone through a reset as the real-estate industry has struggled with interest rates and other factors. But we’re emerging stronger because founders are focusing on more sustainable business models, investors are learning from earlier proptech cycles and real-estate customers are becoming more discerning.”

Instead of chasing growth at any cost, many proptech companies are testing go-to-market strategies, diversifying their revenue streams and keeping costs in check, Ms. Wood explains.

According to the New York-based Center for Real Estate Technology and Innovation (CRETI), global proptech VC funding has fallen from its peak due to a stricter lending environment. But the average amount of capital committed to seed-investment rounds – also known as early stage fundraising efforts – hit $2.2-million in 2024, a 100 per cent increase from the average $1.1-million committed per round in 2020, CRETI reported.

“A strong vision is no longer enough,” CRETI says, adding that startups must prove their value early before raising capital.

A Canadian success story

Roger Poirier, co-founder of Hazelview Ventures – the VC arm of Hazelview Investments, which has one of Canada’s largest rental-housing-management and development portfolios – says his company has been approached by many proptech startups looking for capital. “People in real estate will tell you that as much as they want to, they’re not interested in being the first user of a product,” he says.

Hazelview has invested in only about 2 per cent of the proptech companies that have approached it, Mr. Poirier says, adding his company’s top success story is Toronto-based Augmenta, an AI program that designs layouts of utilities in buildings.

Hazelview led Augmenta’s seed-financing round because the company was able to demonstrate a pilot project showing a 40-per-cent reduction in the time it takes to model electrical systems for buildings.

“AI-powered generative design can evaluate thousands of design possibilities in real time, optimizing for structural efficiency, energy performance, material utilization and constructability,” says Francesco Iorio, Augmenta’s co-founder and CEO. “This technology unifies disparate systems into a cohesive whole, minimizing costly revisions.”

The company’s software is constantly learning and it can now design twice as fast as computer-assisted design programs. While Mr. Iorio expects the technology’s speed to increase, he says Augmenta is expanding its system to fully integrate engineering of electrical, plumbing and mechanical systems.

He acknowledges this does not reduce the value of skilled trades. “Don’t view AI as a replacement, but as an apprentice that can amplify your knowledge, accelerate decision-making and improve collaboration. Foundational knowledge of a craft will remain vital, but so will developing skills that complement AI capabilities.”

Mr. Poirier predicts AI will transform all aspects of commercial real estate. It has the capacity to process large amounts of data from different formats and to seamlessly change as needed. He says a significant percentage of construction costs come from the engineering process. “When you can speed it up and take the waste out of it, the savings can be dramatic.”

Proptech in focus

At Colliers PropTech Lab, a select number of technologies have proved promising enough to receive immediate green lights, Colliers Canada’s John Duda says. These have included:

• ParkChamp, an app that allows users to remotely monitor available spots in parkades and pay for parking. Deployed at eight Calgary buildings, it increased their total annual revenue by $1-million.
• EcoPilot Canada | USA, an AI-based energy-monitoring system that balances building temperatures and increases energy efficiency. When it was implemented at Halifax’s Maritime Centre, it resulted in a 10-per-cent reduction in heating and electricity costs over a 10-month period.
• Tap Report, a Toronto-based building inspection documentation app. When deployed to monitor 11 buildings in the Toronto area and Atlantic Canada, it saved at least 720 hours of work per building annually.