SMART BUILDING MARKET ANALYSIS

The global smart building market size was valued at US$ 79.12 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 24.89% from 2023 to 2030. The global smart building market is rapidly expanding market due to the growing demand for cost-effective energy-saving solutions. The growth of the Smart Building market is mainly driven by a number of factors such as government initiatives, rising awareness about environmental issues, and cost-effective technology solutions. This market is also expected to benefit from increased consumer spending for advanced smart technologies and a growing need for efficient infrastructure.

Global Smart Building Market: Regional Insights

Among regions, North America is projected to show the highest growth in the global smart building market during the forecast period. The region is a major market for IoT-enabled smart devices and smart buildings, as the region is witnessing a rise in the application and acceptance of smart building solutions. With the growing cost of energy and environmental awareness, the adoption of smart, automated, and connected building solutions is increasing in the region. Thus, the global smart building market is expected to show strong growth in the region, over the forecast future.

Moreover, Europe is projected to show significant growth in the global smart building market over the forecast period. This is due to the geographical setup of the region, which is a major factor for the smart building market. Moreover, the presence of urban population, high per capita income, and technological development in the region is also driving the growth of the global smart building market.

 Figure 1. Global Smart Building Market Share (%), By Region, 2023

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Global Smart Building Market Drivers:

Increasing concerns regarding energy consumption to drive growth of the market

The use of energy in office buildings focuses on developing a healthy, comfortable and optimal environment for workers. The energy used in these buildings is mostly spend on things such as, lighting, ventilation, and air conditioning. However, in a food manufacturing plants, the energy used is spent on production processes, due to which, the energy needs are primarily focused on things such as ovens, steam systems, refrigeration units, and furnaces among others. These things account for largest share of energy consumption in this sector. Thus, growing concerns of energy consumption is thus expected to boost growth of the global smart building market over the forecast period.

Rise in initiatives from governments on smart infrastructure projects to fuel market growth

Smart infrastructure is a combination of the real and digital worlds in energy systems, industries, and buildings, which enhances the way people work and live, and it significantly can improve sustainability and efficiency. Smart buildings develop an ecosystem using data and technology, where they learn, interact and adapt to different conditions and requires different stakeholders in their life cycles. Several governments of countries around the world are taking initiatives on smart infrastructure projects, through smart cities and other projects. Thus, the demand for smart building is growing all over the world, which in turn is likely to drive growth of the global smart building market during the forecast period.

Global Smart Building Market Opportunities:

The rapid technological development including cloud, AI, and edge computing is expected to create growth opportunities in the global smart building market during the forecast period. With growing development of such technologies, the smart building segment is witnessing evolution. Due to this, more solution innovations are being introduced in the market. IoT has become the most significant aspect in the digital market, and the use of IoT devices is growing building energy management systems. This factor in turn is likely to bring multiple opportunities in the global smart building market in the coming future.

Increasing focus of governments on sustainable development to generate business opportunities in the global smart building market over the forecast period. Due to this, the adoption of smart building solutions is increasing all over the world, as the tech sector is focusing on catering the demand, as many companies are focused on development of these solutions. Market players are creating solutions around specific end user segments. These factors are in turn creating lucrative environment for growth opportunities in the market.

Global Smart Building Market Trends:

Building energy management system segment is gaining traction in the market

As the number of commercial buildings is growing across the globe, the demand for reduction in consumption of energy is also increasing along with continuously rising use of energy. Due to These factor, the need for innovative technologies is growing for reducing and optimizing use of energy in these buildings. Thus, the building energy management systems are gaining popularity, as they can monitor and control the energy needs of a building. This trend is likely to drive growth of the global smart building market in the coming future.

Rise in smart city projects is growing trend in the market

The urbanization across the globe is growing rapidly, which is further driving the number of smart city projects around the world. For instance, according to a high-level Expert Forum 2019 report, by 2050, 70% of the population around the world is likely to move into urban regions. Due to this, the demand for spaces and buildings to sustain livelihood and for work requirements is expected to grow rapidly. Several governments around the world are thus, investing in smart city projects with cleaner transportation, advanced infrastructure, and other smart technologies. Therefore, this trend is likely to continue in the global smart building market in coming years.

Global Smart Building Market Restraints:

Lack of technology alignment to hinder the market pace

With increasing technological advancements, the complexity of smart buildings continues to grow, needing for a faster follow-up looks through retro-commissioning. In some cases, ongoing monitoring-based commissioning is needed too. Along with this, the risks related to sustained operational integrity are growing too. This factor in turn is likely to hinder adoption of smart building solutions, which is further expected to restrain growth of the global smart building market over the forecast period. However, growing development of user-friend technologies in smart buildings, which is likely to support the market growth.

Dearth of skilled workforce to limit the market growth

The market is witnessing a lack of competent workforce skilled in assessment of smart solution systems. Professionals working in the field are required to have knowledge of the installation and design changes in the context of future requirements. If failed, it could lead to complications. Thus, lack of skilled professionals is expected to hamper growth of the global smart building market during the forecast period. 

Figure 2. Global Smart Building Market Share (%), By Component, 2023

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Global Smart Building Market Segmentation:      

The global smart building market report is segmented into Component and Application.

Based on Component, the market is segmented into Solution (Building Energy Management System, Infrastructure Management System, Intelligent Security System, and Other Solutions Services), Services. Out of which, Building Energy Management System is expected to dominate the global market over the forecast period and this is attributed to the rise in demand for reduced levels of energy consumption and continuously growing energy use due to rise in commercial buildings. This in turn is driving the demand for building energy management system solution for energy savings and conservation.

Infrastructure Management System is also expected to witness significant growth in the near future and this is owing to the growing adoption of IoT-enabled infrastructure management systems and increasing awareness of space utilization. The technological advancements in infrastructure management systems is growing rapidly. This in turn is boosting the demand for these solutions, which is driving growth of the segment in the market.

Based on Application, the market is segmented into Residential, Commercial. Out of which, Residential is expected to dominate the global market over the forecast period and this is attributed to the growing launch of new solutions by market vendors. For instance, in January 2020, ADT introduced a home security platform, Blue, which is the advanced product offering, separate home security parts that can be installed by clients themselves. Residential buildings are seeing several technological innovations such as emergency lighting, and lighting control for avoiding accidents that occur during power failure. With increasing number of novel product launches, the segment is likely to see strong growth in the coming future.

Commercial segment is also expected to witness significant growth in the near future and this is owing to the growing automation in mechanical building systems, software, and electrical systems. For instance, in March 2020, ABB Electrification announced the acquisition of Cylon Controls Ltd. to advance its portfolio of Smart Buildings in the segment. Thus, this factor is likely to drive growth of this segment in the global smart building market.

Global Smart Building Market: Key Developments

In March 2020, ABB Ltd. announced the acquisition of Cylon Controls, the Irish company for expansion of its presence in the sector of smart building. With this acquisition, the company will strengthen its portfolio of commercial building solutions and emphasize on delivery of new solutions for comfort and energy optimization.

In April 2021, Honeywell International Inc. received a contract from the MiQro Innovation Collaborative Center (C2MI) for its novel thermal screening and risk self-assessment process in Quebec, Canada.

In February 2020, Siemens Smart Infrastructure announced the launch of a smart building suite designed for creating more flexible and efficient workplace. This suite includes IoT-enabled devices, services, and applications that make the offices a competitive edge for companies.

In May 2021, Schneider Electric SE, introduced the Innovation Experience: Live Healthcare Lab, which is the first ever immersive healthcare experience that features novel intelligent patient room.

Global Smart Building Market: Key Companies Insights

The global smart building market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis.

Some of the key players in the global smart building market are Softdel (A UNIDEL Company), ABB Ltd., Hitachi Ltd., Honeywell International, Avnet Inc., Siemens AG, Legrand SA, Schneider Electric SE, Johnson Controls Inc., Huawei Technologies Co. Ltd., Cisco Systems, and IBM Corporation.

*Definition: A smart building is an intelligent, integrated system of sensors, data, automation, communication and intelligence that provides the occupants and other stakeholders with better environments, improved productivity, and lower operating costs. Using intelligent technologies, smart buildings can reduce energy consumption, improve maintenance performance and help build healthier and happier workplaces.