A New Era for Canadian Real Estate: Reinvention Key to Driving Future Growth

Canada’s real estate companies are experiencing profound change that requires them to reimagine their business models and how they operate. Take the example of the condominium market, which is facing a wide range of challenges, including the collapse of a business model often focused on large numbers of presales of units to investors. Among the many implications of the sector’s downturn is the urgency to rethink how condo builders finance new developments.

“There will be innovation in this time because we have no choice in this market,” said one interviewee, acknowledging the pressures companies are under to adapt their business models amid the challenges in the condo market.

It’s not just the condo market or even the broader real estate industry that’s facing the need for a deep rethink. PwC’s recent Value in Motion research analyzed the scale of disruption affecting all sectors of the economy. It found trillions of dollars in value will change hands in the coming decade due to growing resource constraints and the supply and demand impacts of global megatrends such as climate change, demographic shifts, and AI. In this year alone, companies reinventing their business models will account for up to US$7.1 trillion in redistributed revenues globally, the research found.

These three megatrends—climate, changing demographics, and AI—are creating investable growth opportunities in domains at the intersection of real estate and other industries, including energy, technology, health care, and government. What does this look like in practice? Consider how real estate companies, working across industries, can turn buildings into revenue-generating sources of clean energy. Or how they can reimagine seniors’ housing to meet the needs of an aging population. And how they can use advanced manufacturing and technology to lower homebuilding costs through modular construction.

Among this year’s interviewees, one developer described how their business model evolved to include acting as a general contractor, which they believed could save them money by allowing them to take control of site construction. The push to reinvent was also evident in PwC’s 28th Global CEO Survey. More than half (52 percent) of real estate respondents who took part in the survey said their organization had begun competing in new sectors in the last five years, showing the industry’s openness toward changing how it does business.

Another way to look at business reinvention is to consider emerging areas of business activity that offer significant growth potential for real estate companies in the future. Some of the opportunities can be seen in PwC’s Value in Motion research, which explored the emergence of new business ecosystems that enable companies to participate in what are called domains of growth focused on serving fundamental human needs: how we move, make and build things, fuel and power our economy, and feed and care for ourselves. Underpinning these six domains are the funding, connectivity, and computing power and governance that support our industrial system in meeting these critical human needs. The evolution of these domains, which PwC Canada’s analysis shows could represent up to $3.65 trillion in Canadian economic activity in 2035, is creating new growth opportunities for companies.

Each of these domains has a real estate component. Consider, for example, how megatrends will alter existing mobility preferences, create new ones, and change how we move. The rise of autonomous vehicles and accelerated investment in transit could prompt city planners and developers to question long-held assumptions about parking. This includes reconsidering the number of parking spaces in new high-rises and redesigning buildings to support new mobility infrastructure, such as dedicated storage for e-bikes and more charging stations for electric vehicles.

Similarly, new capital allocation models are emerging with the potential to rethink how large-scale projects are funded. This cross-sector collaboration between nontraditional partners could change not only how capital is deployed, but who deploys it. For example, to help close Canada’s infrastructure gap, financial players could partner with governments to issue public/private infrastructure bonds. These bonds reduce risk and provide the stable, long-term financing that development firms need to undertake major projects, including the construction of affordable and sustainable housing. This creates an opportunity for developers to innovate. By offering fixed-return infrastructure bonds, developers can tap into new sources of capital to fund the next generation of real estate and infrastructure assets.

These shifts in mobility and funding are just two examples of the large pools of value that organizations from different sectors that intersect with real estate can capture. The following sections describe other domains that will form and grow, offering opportunities for Canadian real estate companies to seize a share of the value in motion. 

One of the biggest cross-sector opportunities relates to the intersection of real estate, energy, and infrastructure enabled by efforts to digitize, decentralize, and decarbonize our power systems. These shifts create an important role for various classes of real estate, given the scarcity of land and the need to manage energy costs.

This is a chance for real estate organizations to align their sustainability objectives with their growth goals. As one developer explained, the decision to invest in alternative energy sources such as geothermal is a business-driven choice focused on creating new long-term revenue streams.

But the opportunities extend even further. Consider the possibility of embedding battery storage components in building materials such as cement. By storing power generated by renewable energy sources to provide electricity and supply the grid as needed, buildings can generate new revenues and better manage costs.

There’s also the example of real estate companies putting solar panels on the roofs of industrial buildings and retail properties such as grocery stores. This is by no means a new phenomenon, but it’s one that’s gaining traction in some countries, especially given the new possibilities enabled by creative partnerships that can make rooftop solar panel projects more viable given traditional barriers including initial capital outlays. 

Examples include grocery stores partnering with solar panel companies to install energy infrastructure at no upfront cost. The grocery store in effect becomes an energy-producing asset as the solar panels feed electricity into the grid. The retailer also benefits from cost savings used to pay back the solar panel company.

Another key trend generating significant new demand for real estate is the growth of data centres in the connect and compute domain. Combining attributes related to infrastructure, technology, and real estate, data centres represent another example of how lines between different sectors and players are blurring. It’s also an area where constraints are a significant concern, given both the need for substantial amounts of electricity to power and cool a data centre and for sufficient land close to sources of demand.

Data centres have been a top prospect for investment and development in Emerging Trends surveys of Canadian real estate companies in recent years, and some interviewees raised them as an area of focus for their business. Despite challenges such as power availability and large capital requirements, data centres remain an opportunity given the significant amount of compute capacity needed for AI models.

Part of what’s happening is a rationalization of what had been an oversupply of interest in data centres to focus on investors with the balance sheets and capital needed to move massive projects forward. Even so, there are opportunities for others to play in this space without making massive investments in new data centres. There may be ways, for example, to upgrade existing data centres to serve AI computing needs. In other cases, real estate companies can acquire existing data centres sold by other players and then partner with an operator to run the facility. 

These examples show that while data centres do come with a complex set of considerations, requirements, and constraints, there remains a key role for the real estate industry in providing the land, expertise, and capital needed to develop them. 

Another domain that is seeing the impacts of key megatrends—notably demographic shifts and technological disruption—is how we care for ourselves. An aging population is driving notable change in real estate, evidence of which can be seen in the much warmer sentiment among interviewees this year toward seniors’ housing. “The silver tsunami is coming,” said one interviewee. “People are now waking up to the reality of senior living.”

But opportunities in this domain extend beyond traditional seniors’ housing. One area gaining attention is medical office space, an asset class one developer noted is largely uninfluenced by economic cycles. Demand is instead driven by two powerful forces: the demographics of an aging population and a government policy shift toward delivering more health-care services in community settings. As specialized assets with unique infrastructure requirements, medical offices are a clear example of an emerging real estate category that requires new partnerships and capital to scale. This opens the door to thinking even further about what the future of care could look like and the innovative real estate models to support it.

Consider, for example, the possibility of gently densifying single-family home lots to include multiple units to house seniors while allowing the owner to age in place. Such an approach could include consideration of other aspects of caregiving, such as setting aside a unit for a personal support worker to care for the seniors residing there. Builders could also work with partners to incorporate technological solutions such as fall-detection tools that link seniors directly with first responders in case of an emergency.

The point about technology integration is critical when it comes to looking at seniors’ housing that includes an operational component. While operating assets overall are seeing increasing interest as a way to grow business during these challenging times, costs remain a significant concern, highlighting the need to invest in technologies such as AI solutions that improve efficiencies and streamline operations. 

The domain that relates most directly to real estate, how we build, is also evolving in response to the urgent need to significantly increase housing supply and affordability—not just in Canada but also in many other countries. As builders face constraints such as labour availability and rising costs, attention is shifting to construction methods that have the potential to speed up homebuilding. Among them are various forms of prefabricated homes, such as modular housing, that have quickly risen up the agenda of policymakers and the real estate industry during 2025.

By combining standardization of home designs and building processes with advanced technologies such as AI and innovative manufacturing capabilities, modular housing has the potential to increase productivity and, if scaled significantly, help mitigate cost and affordability pressures. As with other domains, partnerships will be critical to enabling modular housing given the need to bring together diverse players across engineering, construction, manufacturing, technology, finance, and real estate.

That is not to say that the real estate industry doesn’t have concerns about the viability of modular homes as a solution to Canada’s housing challenges, an issue one interviewee alluded to when they asked, “How do you get modular to work?” Interviewees noted the significant structural, financial, and operational challenges associated with modular housing, including the need for consistent demand for units to justify large upfront capital expenditures to build new facilities and achieve scale.

One interviewee highlighted the importance of engaging consumers on what modular housing entails. “Modular is less choice but not less quality, and that’s part of the education,” they noted.

Many interviewees acknowledged the role of modular housing as part of a broader reinvention of the industry and how homes are built, but they also emphasized the importance of supportive public policies. These include measures that de-risk the industry against downturns in demand through government procuring modular homes and acting as a first buyer to help companies scale their operations. 

Another key challenge relates to regulatory issues such as building codes that can create barriers to efficiently building modular housing. Interviewees also emphasized the need to carefully study experiences with modular housing elsewhere in the world, including not just countries that have seen successes but also those where government efforts to stimulate the industry have failed to deliver expected outcomes.

A recurring theme from this year’s interviews is the urgent need for new financing models tailored to modular construction. Unlike traditional builds, modular projects require significant upfront investment in materials and manufacturing, but conventional project financing only releases funds as onsite milestones are met. This mismatch creates a major barrier to scaling modular solutions and highlights the importance of bridging the gap between upfront capital needs and traditional financing models.

Government support—through procurement, first-buyer programs, and underwriting upfront costs—can address this challenge. At the same time, innovative private financing structures, such as equipment, inventory, and revenue-based models, are emerging to better align with modular production cycles. Bulk order commitments, like those from BCH, also enable manufacturers to secure expansion financing and reduce investor risk, further supporting industry growth.