The Global Smart Building Market was valued at USD 79.43 Billion in 2022 and is projected to reach USD 184.36 Billion by 2030, registering a CAGR of 11.60 % for the forecast period 2023-2030.
Market Definition
An intelligent building is a structure that employs the Internet of Things and automated technologies to manage various building systems, including lighting, security, HVAC, and ventilation. Using sensors, actuators, and microchips, a smart building gathers and organizes data according to the needs and services of a business (or household). These smart infrastructure solutions help facility managers, building owners, and operators enhance asset performance and dependability while lowering energy use, making better use of available space, and lessening the environmental impact of buildings. The growing need for better resource management in urban environments and better utilization of the building (and building premises) is what is driving the surge in the adoption of smart buildings in many regions. Additionally, the market for smart buildings is expanding due to the growing need for security and safety for the general public. These kinds of applications have shown to be crucial to the development of smart building solutions during the COVID-19 pandemic, which is predicted to worsen over the next few years.
Market Size:
- 2022: USD 79.43 Billion
- 2030: USD 184.36 Billion
- CAGR (2023-2030): 11.60%
Smart Building Market Dynamics
Drivers Propelling the Demand for Smart Buildings include:
The market is expanding due to the rising use of smart technology and the need for energy-efficient systems:
Energy-efficient lighting, HVAC, and other systems are made possible by smart buildings through the use of sensors, automation, and data analytics. Studies have shown that this can result in energy bill reductions of up to 30% or more. Preventive maintenance is made possible by smart systems, which identify possible equipment problems before they result in breakdowns and save expensive repairs or replacements. Smart buildings can further reduce operating costs by optimizing air and water consumption through real-time monitoring and management of resource usage. Smart buildings help reduce greenhouse gas emissions and mitigate climate change by optimizing energy consumption and promoting resource efficiency. Tight laws governing energy efficiency in buildings, such as LEED certifications, encourage the use of smart technologies that prove compliance and improve a structure's environmental profile. Property values and rental rates rise when smart energy-efficient systems are installed in buildings, drawing in more ecologically conscious tenants. Individual preferences for lighting, temperature, and air quality are learned by smart building systems, which then automatically modify the settings for maximum comfort and well-being. Both productivity and occupant satisfaction may increase as a result. An environment that is both more comfortable and healthier to work in is created by smart systems that monitor air quality and activate ventilation or air filtration units to maintain appropriate air levels. Through smart devices or mobile apps, tenants can often access and control building features like lighting and temperature, which increases their sense of control and ownership over their surroundings. Automated control and energy optimization are made possible by these central hubs that gather data from sensors and oversee different building systems.
For instance, in November 2022, according to the World Economic Forum, Global energy intensity improved by just over 2% in 2022, but it needs to double to 4% annually by 2030 to meet global efficiency targets, according to International Energy Agency (IEA) data. If achieved, this would result in a 40% increase in economic output per unit of energy used. More than half of the 150 countries analyzed by the IEA have achieved a 4% improvement at least three times in the past decade, and five G20 countries – China, France, Indonesia, Japan, and the UK – have sustained an average of 4% or more over five years.
IoT and Sensor technologies driving the growth:
Real-time data on a variety of parameters, including temperature, humidity, lighting levels, occupancy, energy consumption, air quality, and even vibration or sound, is gathered by a dense network of sensors positioned throughout the building. This information is continuously streamed to a cloud platform or central hub, giving an all-encompassing and dynamic view of the building's operations and occupant behavior. Smart building systems can anticipate maintenance requirements, improve performance, and customize the occupant experience by evaluating this data and drawing insightful conclusions. Smart building systems can automatically adjust HVAC systems, lighting, appliances, and window blinds based on sensor data and user preferences. This can result in significant energy savings, Sensor data can predict possible equipment problems before they arise, enabling preventive maintenance and cutting down on repair expenses and downtime. Smart buildings can make their occupants' environments more comfortable and productive by automatically modifying them based on personal preferences or real-time occupancy. When a room is detected, the lighting or HVAC system is automatically adjusted to save energy and enhance comfort. To save energy and guarantee comfort, the device can recognize and automatically adjust to preferred temperature settings. Track humidity, pollutants, and CO2 levels to send alerts or activate ventilation systems for better air quality. Early leak detection reduces damage and water waste. Direct cars to open parking spots, maximizing parking usage and minimizing traffic.
For instance, in 2022, Honeywell announced that Verdantix had named it to the independent research firm’s Green Quadrant – IoT Platforms for Smart Buildings 2022 report. The Verdantix report highlights a market that consists of innovation driven by the need to meet expanding customer demand. The report states that building IoT platform vendors are well-placed to tackle key use cases and generate value across real estate portfolios for the full range of building stakeholders, from C-suite executives and portfolio managers to building occupants.
Recent Developments
In August 2022, Johnson Controls, the global leader for smart, healthy, and sustainable buildings, has partnered with Microsoft Beijing Campus for its ongoing retrofit and optimization of building operations, achieving 27.9% energy savings and ensuring key equipment uptime to 98%. As a result, the campus has been granted an energy-saving endorsement and financial subsidy by the Beijing Municipal Government and the Haidian District Government.
In January 2023, ABB will launch its ABB Cylon Smart Building Management Systems (BMS) for the Middle East region at the Light Middle East and Intelligent Building Middle East 2023 event, held at the Dubai World Trade Centre from January 17 to 19, 2023. The ABB Cylon Smart Building Management Systems portfolio of products covers scalable automation and energy control for a wide variety of commercial or industrial buildings, regardless of size. The BMS enables buildings to automate functions and reduce energy costs with energy control and management. It also allows real-time monitoring and control of the building facility.
Restraint
High cost of implementation Impedes Market Growth:
The integration of smart building technologies frequently necessitates substantial initial financial outlays. This covers the price of purchasing and setting up sensors, energy management programs, automation systems, and other parts of smart buildings. Budgetary restrictions may prevent organizations, landowners, or developers from making significant upfront investments in smart building technologies. This is especially true for owners of small and medium-sized businesses or properties who have limited funding. For some stakeholders, the perceived lengthy payback periods of smart building investments may be a turnoff. While energy savings and operational efficiency are long-term benefits of smart buildings, those who prioritize short-term financial gains may find the time it takes to see a return on investment concerning. Decision-makers may be reluctant to commit to smart building implementations due to the uncertainty surrounding the return on investment, particularly about energy cost savings and operational efficiency improvements. It can be difficult to integrate different smart building components, like sensors, controls, and management platforms. The overall high implementation costs could be attributed to the cost of guaranteeing smooth integration and customization to satisfy particular building requirements. Putting smart building solutions into practice might call for specific knowledge, such as hiring experts familiar with the relevant technologies' nuances. The cost of hiring or training staff with these abilities may increase the total cost of implementation. It can be more costly to retrofit existing buildings with smart technologies than to incorporate these technologies into brand-new construction projects, this factor hinders the growth of the Smart Building market.
For instance, in September 2020, according to Shingobee, Costs to add IoT-based controls and monitoring can be as little as $0.75 per square foot, depending on the system. IoT device systems typically require an electrician and an IT network professional along with an electrical engineer. Focusing on HVAC, lighting, and some electrical loads, it is reasonable to expect savings from 10% to 25% when implementing proactive energy management programs in a mid-sized building.
Challenges
Growing concerns about security and privacy as a result of IoT-enabled devices.
These days, a lot of buildings incorporate smart technology into their layouts and functions. Using IoT and sensor technologies provides both landlords and tenants with a great deal of convenience. However, the use of these technologies puts buildings' security at risk. Because most IoT sensors and devices run on outdated, unpatched software, have weak security, and employ unconventional communication protocols, smart buildings may be vulnerable to several issues. Hackers constantly look for technological gaps in targets to gain access to a specific network, steal important information, or take over a facility. Cybercriminals, for example, compromise Business Activity Statements to disable passenger lifts, obtain access to CCTV security feeds, and interfere with the building's power supply entirely or in part. Any smart building could be vulnerable to a well-planned cyberattack that leverages easily accessible IoT devices and sensors to expose servers, sensitive data storage, and customer and employee information for nefarious purposes. Thus, the growing concerns about security and privacy brought about by the adoption of IoT-enabled devices limit the growth of the smart building market.
Opportunities
Emergence of 5G technology
With the advent of 5G technology, new and potent intelligent building capabilities are improved. It is essential to the growth of IoT-enabled devices because it offers effective real-time analytics and operational capabilities. IoT-enabled devices in smart buildings produce enormous amounts of data, but 5G technology makes it possible to quickly build data transport, interpret it, and take cost-effective action. In addition to offering many other innovative and practical Building Internet of Things (BIoT) and AI-enabled innovations, 5G greatly improves the user/occupant experience. By 2025, investments in 5G networks are expected to reach $1 trillion globally, according to GSMA. Additionally, since 5G networks will serve longer investment cycles than 4G, the coexistence of 4G and 5G is expected to continue into the 2030s. The notably increased bandwidth and data transfer speeds of 5G allow a wide range of smart building systems, sensors, and devices to communicate with each other with ease. This enables quicker reaction times, more effective building management, and real-time data exchange. More sophisticated technologies, such as sophisticated artificial intelligence, machine learning algorithms, and virtual reality apps, can also be integrated into smart buildings thanks to increased bandwidth. Due to 5G's near-instantaneous communication, critical events like equipment malfunctions, fire alarms, and security breaches can be responded to almost instantly. This reduces possible harm or interruptions and enables quick remedial action. Applications like remote building monitoring and control are also made possible by low latency, which gives building managers the ability to access and control systems with little to no lag or delay from any location.
Snapshot:
| Attributes | Details |
| Market Size in 2022 | USD 79.43 Billion |
| Market Forecast in 2030 | USD 184.36 Billion |
| Compound Annual Growth Rate (CAGR) | 11.60 % |
| Unit | Revenue (USD Million) and Volume (Kilo Tons) |
| Segmentation | By Solution, By Service, By End-Use & By Region |
| By Solution |
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| By Service |
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| By End-Use |
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| By Region |
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| Base Year | 2022 |
| Historical Year | 2018 - 2022 |
| Forecast Year | 2023 - 2030 |
Segment Analysis of the Smart Building Market
The Smart Building Market is segmented by Solution, application, Service, and region.
By Solution
The Safety & Security Management segment held the largest market share in 2022:
Solution is sub-segmented into Safety and security Management, Energy Management, Building Infrastructure Management, Integrated Workplace Management Systems, and others. The Safety and Security Management segment accounted for the highest market share in the global Smart Building market for 2022. Consolidated administration, integration with other internal systems, and data collection and analysis are all included in the safety and security segment. The market is growing because smart buildings are frequently outfitted with Internet Protocol (IP)-)-enabled safety and security devices. These devices give facilities managers new tools at their disposal to enhance the building's security and safety. Furthermore, during the forecast period, strict government laws about building safety and security are expected to support the segment's growth.
On the other hand, the energy management system segment has a significant market share over the forecast period, due to the noteworthy expansion that may be ascribed to the growing significance of Energy Management System (EMS) deployments in residential, commercial, and industrial settings. Customers have been drawn to the market by the companies' innovative sustainable smart home energy management solutions. For example, at the CES (Consumer Electronics Show) in January 2023, Schneider Electric unveiled its home energy management solution, enabling energy independence and comfort for homeowners.
By Service
The Implementation segment was the leading segment in 2022:
By Service, which is divided into Consulting, Implementation, Support, and maintenance. The implementation segment accounted for the largest share 36% of the global Smart Building market in 2022. The increasing use of smart building software and services across a range of business sectors is responsible for the segment's growth. To create a smart building, service providers must first link sensors and control systems to basic systems like lighting, heating, power meters, water pumps, fire alarms, and lighting. The providers of implementation services aid building owners, managers of facilities, and operators in the simple deployment and enhancement of the core systems' operational effectiveness. Through 2030, the advantages of implementation services will boost segment growth.
The support and maintenance segment is anticipated to register rapid growth in the forecast period, Strong prospects for market expansion are being created by the growing use of smart building solutions throughout the world. The building operators can avail themselves of smart building management solutions support, maintenance, and upgrades through the support and maintenance services. These service providers also support smart building operators in implementing intelligent automation and techniques for the successful and economical operation of smart buildings. From 2023 to 2030, these support and maintenance service capabilities will help the segment grow.
By End-Use
The Commercial segment was the leading segment in 2022:
By End-Use, which is divided into commercial, residential, and industrial. The commercial segment accounted for the largest share 54% of the global Smart Building market in 2022. Because smart building solutions are increasingly being implemented in IT companies, shopping malls, stadiums, and healthcare facilities, the segment share is high. The commercial segment has been growing as a result of companies in the market developing a variety of technological solutions meant to provide better solutions. For example, ABB Ltd. introduced ABB Ability Building Analyzer, a new smart building management tool, in March 2023. This tool helps operators of commercial buildings cut down on emissions and energy use.
The Residential segment is anticipated to register rapid growth in the forecast period. The demand for smart door lock security systems, smart home lighting, HVAC (heating, ventilation, and air conditioning) management, and smart meters—which monitor and control the building's mechanical and electrical systems—is responsible for the residential segment's growth. Additionally, the COVID-19 pandemic prompted the use of smart home technologies to stop the virus from spreading, which is improving the market's prospects for segment growth. Customers used robotic vacuum cleaners for housecleaning, sophisticated security cameras for security, and video doorbells to ensure hands-free operation.
Regional Analysis
North America occupied the largest market share in 2022:
North America has the largest revenue market share of 45% in 2022, The United States in particular, as well as North America, are centers of technological innovation. When it comes to creating and implementing cutting-edge technologies, including those that deal with smart building solutions, the region has been at the forefront. The greater rate of adoption of smart building technologies in North America can be attributed to this technological leadership. Businesses and organizations in North America were among the first to implement smart building technologies. The area has a history of adopting cutting-edge energy management, building automation, and Internet of Things (IoT) applications. A mature market with well-established solutions and infrastructure has resulted from early adoption. An important factor contributing to the market expansion for smart buildings is government support and initiatives.
On the other hand, Asia Pacific accounted for a significant share over the forecast period, Asia Pacific is known for its swift urbanization and population expansion. The need for infrastructure, commercial space, and residential buildings in urban areas is growing, which has prompted the use of smart building solutions to improve overall livability, sustainability, and efficiency. The Asia Pacific region has seen the implementation of numerous government programs and laws that support smart infrastructure and sustainable urban development. Policies that encourage or require the use of smart building technologies support the expansion of the market. Smart city initiatives are being actively pursued by a number of cities in the Asia Pacific region. These programs use technology integration to enhance building management, transportation, energy efficiency, and other facets of urban living. An essential component of the entire smart city ecosystem is smart buildings.
Competition Analysis
- ABB Ltd.
- BOSCH
- Cisco Systems Inc.
- Emerson Electric Co.
- Hitachi, Ltd.
- Honeywell International Inc.
- INTEL Corporation
- Johnson Controls
- KMC Controls
- LG Electronics
- Legrand.
- Schneider Electric SE
- Siemens
- Sierra Wireless
- Telit
Segmentation Analysis of the Smart Building Market
By Solution
- Safety & Security Management
- Energy Management
- Building Infrastructure Management
- Integrated Workplace Management System
- Network Management
- Others
- Consulting
- Implementations
- Support & Maintenance
- Commercial
- Residential
- Industrial
- North America
- Europe
- Asia Pacific
- Latin America
- Middle East and Africa
Impact of the COVID-19 Pandemic on the Smart Building Market:
The need for smart technologies to create a safe environment is predicted to rise when commercial buildings reopen for in-office work following the pandemic. Following a lockdown, corporate tenants and facility managers of commercial buildings are required to provide a secure workplace. As a result, they must manage routine cleaning and sanitization, appropriate office ventilation, smart entry control, temperature monitoring equipment, and space optimization for physical distancing using smart technologies. It is anticipated that these elements will increase demand for smart building solutions. In the future, smart technology may also be useful for tracking employee movements to stop the spread of infections. Intelligent technology can provide real-time data as it communicates with people and systems. Opportunities for intelligent building solutions to slow the spread of airborne illnesses have increased as a result of the pandemic. Therefore, it is anticipated that the long-term demand for sophisticated infrastructure will grow exponentially after the pandemic.
