The proptech industry is entering a new era, with AI emerging as a key driver of innovation across the real estate industry, according to a new report from Proptech Collective.
The non-profit organization analyzed more than 530 active startups and found that the sector is adapting to market shifts with a sharper focus on efficiency, integration and long-term value creation.
AI: A game-changer in proptech
AI is reshaping proptech by enhancing automation, predictive maintenance and property management. Companies are prioritizing data governance, system architecture and AI strategy development to ensure responsible implementation. AI-driven tools are also transforming planning, risk management, and energy optimization, improving operational efficiency across residential, commercial, and construction sectors.
Key proptech trends for 2025
As the industry looks ahead, several emerging trends are set to shape the future of proptech:
Integrated transactions
Homebuyers and sellers are demanding more seamless, efficient processes. Companies are digitizing and consolidating financing, insurance and transaction management, reducing friction for consumers and Realtors. AI is also streamlining the lead-to-lease process, automating lead generation and tenant screening.
Modular and offsite construction
Facing labour shortages and rising costs, the construction industry is shifting towards offsite construction and prefabrication. The report highlights that assembling components in controlled environments reduces timelines, improves quality control, and enhances scalability. Government initiatives, such as funding for modular housing, are supporting this shift.
Decarbonization and grid infrastructure
Sustainability is no longer just a regulatory requirement but a core financial strategy. Asset managers are prioritizing energy-efficient buildings to drive profitability. The report highlights the increasing demand for sustainable energy solutions, as data centers—driven by AI adoption—place greater strain on grid infrastructure. AI is being used to optimize energy consumption and automate HVAC systems to reduce carbon footprints.
Industry consolidation and sustainable growth
Over the past decade, the proptech industry saw an explosion of standalone solutions, leading to fragmented experiences. Now, companies are focusing on platform integration and consolidation. Mergers and acquisitions (M&A) are accelerating this trend, with over 65 M&A transactions recorded in the last five years, with three happening in the first few weeks of January.
Despite economic headwinds, Canada remains a leader in real estate innovation, with Toronto, Vancouver, Montreal, Calgary, and Kitchener-Waterloo serving as key hubs. The report notes that 77 per cent of Canadian proptech startups were founded in the last decade, with 35 per cent emerging in the past five years. Startups are prioritizing unit economics and sustainable business models to navigate tighter funding conditions while continuing to innovate.
“As we start 2025, it really feels like proptech is entering its next era,” says Stephanie Wood, report lead at Proptech Collective and vice president at Alate Partners.
“The Canadian real estate industry faced a transformative moment in 2024,” said Fred Cassano, real estate leader at PwC Canada. “Tight financing and rising costs continue to challenge growth, but sustainability and technology are creating new opportunities.”