Smart Building Market Size, Share & COVID-19 Impact Analysis, By Component (Solution, and Services), By Application (Residential, and Commercial), and Regional Forecast, 2022-2029

The global smart building market was valued at USD 67.60 billion in 2021 and is projected to grow from USD 80.62 billion in 2022 to USD 328.62 billion by 2029, exhibiting a CAGR of 22.2% during the forecast period. Based on our analysis, the global market exhibited a decline of 17.4% in 2020 compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with smart building experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels.

Smart buildings contain a sophisticated control system that controls building operations, such as ventilation, air conditioning, heating, lighting, and other systems, consisting of sensors, actuators, and microchips. The market gains traction as these buildings offer capabilities to lower operational costs, tenant management, security management, and building performance management. Furthermore, the emergence of 5G technology and rise in smart city projects are expected to create lucrative opportunities for the growth of the smart building industry. For instance,

• In December 2021, the National University of Singapore (NUS) Department of the Built Environment introduced a new research center to promote the adoption of 5G technologies, accelerate 5G training in smart facilities management, and boost the digital capability of Singapore’s construction industry,


• In September 2019, Coretrust Capital Partners implemented 5G from Connectivity Wireless Solutions to enhance the building's efficiency to convert the Los Angeles tower into a smart and connected building.

COVID-19 IMPACT

Surge in Demand for Safe and Healthy Workplace to Fuel Market Development

The reopening of commercial buildings post-pandemic for in-office work is expected to boost the demand for smart technologies for a safe environment. The commercial building facility managers and the corporate tenants need to offer a safe office environment post lockdown. Thus, they are expected to utilize smart technologies in managing regular cleaning and sanitization, proper office ventilation, smart entry control, temperature measuring devices, and space optimization for physical distancing. This factor is expected to fuel the demand for smart building solutions.

Further, smart technology can be helpful in future to track employee movement for limiting the spread of infections. As intelligent technology interacts with systems and people, it can offer real-time data. The pandemic has surged intelligent building solution opportunities to help cut the spread of airborne diseases. Thus, the demand for advanced infrastructure is expected to witness exponential growth post-pandemic in the long term.

LATEST TRENDS

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Increasing Smart City Projects to Surge Market Opportunities

Rapid urbanization is expected to accelerate the global smart building market growth in the forthcoming years. For instance, as per a high-level Expert Forum 2019 report, 70% of the world population is expected to shift in urban areas by 2050. This factor would surge the demand for buildings and spaces for sustaining livelihood and work requirements. Governments across the world invest in smart city projects with advanced infrastructure, cleaner transportation, intelligent buildings, and other smart technology considering the urbanization trend. As building contributes to the major energy consumption and investment, developing connected building is an initial step toward smart city projects. For instance,

• In addition to the Smart Nation initiative, the Singapore government has also launched a Green Mark Scheme. In accordance with the scheme, buildings are given a traffic-light code that resembles their environmental-friendliness. The government has targeted converting 80% of buildings to be certified as green by 2030 under this scheme.

• In February 2019, Aragon aimed to reduce 20% of total energy consumption by focusing on Zaragoza smart city buildings. Through intelligent building, the city is expected to boost the energy efficiency of the smart city. Today, through the collaboration of smart cities and buildings, the city witnesses 30% reduction in its operational cost and targets ISO 50001 standard compliance.

Thus, with rising smart city projects and investments, the demand for smart and connected buildings is expected to grow rapidly.

DRIVING FACTORS

Growing Energy Consumption Concerns to Drive Market Growth

The growing concerns of increasing energy consumption worldwide are expected to fuel more advanced and energy-efficient technology. For instance, as per the IoT and smart building 2019 report of IBM Corporation, commercial and real estate buildings utilize 50% water and energy. The report further states that buildings are expected to consume maximum energy by the end of 2025. Similarly, according to Schneider Electric Whitepaper, 36% of carbon emission comes from buildings. This high consumption and wastages exponentially increase the overall cost of operations and maintenance.

However, strict governance on energy consumption and green building initiatives boost the demand for energy-efficient technology across buildings. This factor is expected to propel the implementation of intelligent building solutions globally. According to the IBM Corporation report, implementing advanced technology, including AI, IoT, and others helped reduce energy usage by 40% and 10%-30% maintenance costs. Similarly, as per Deloitte’s report, the implementation of smart technology and IoT devices witnessed 70% energy saving in three years. This factor is expected to fuel the smart building market growth.

RESTRAINING FACTORS

Growing Incidence of Cyber Attacks in Connected Building to Hamper Market Growth

The significant barrier to market growth is growing cyber-attacks. Intelligent technology is connected to every building system and device. It may sometimes provide confidential and personal information on being hacked. For instance, as per the Kaspersky report, four out of 10 connected buildings are at risk of cyber-attacks. This high risk of cyber-attack is expected to hamper market growth in future. Thus, it is essential to implement operational contingent plans to ensure the safety of connected buildings from such attacks.

SEGMENTATION

By Component Analysis

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Increasing Focus on Energy Saving to Propel Smart Building Solution Demand

Based on component, the market is bifurcated into solutions and services.

The services segment is expected to showcase rapid growth during the forecast period. This factor is attributable to the rising implementation of intelligent building solutions. The demand for professional services, such as consulting services, system integration, deployment, support, and maintenance, is increasing.

The solutions segment includes building infrastructure management, security & emergency management, and energy management dominating the market.

Energy management is expected to grow rapidly due to increasing green building initiatives and stringent government regulations on energy consumption. For instance, Shanghai’s New Development Bank (NDB) implemented intelligent building solutions to monitor indoor lighting, electric curtains, and windows and witnessed more than 15% energy saving.

The security & emergency management solution is expected to gain maximum share. There is increasing demand for security systems, surveillance systems, advanced building operation services, and smart workplace solutions in commercial buildings. This factor is likely to drive the security & emergency management solutions segment. It is further categorized into access control system, video surveillance system, and safety system.

Building infrastructure management is expected to gain steady growth, owing to the rising challenges in optimizing large commercial building operational costs. It is further categorized into parking management system, smart water management system, and elevators & escalators system.

By Application Analysis

Growing Investment on Smart Technologies to Enhance Commercial Building Operational Efficiency

By application, the global market is classified into residential and commercial.

The commercial segment is expected to dominate the segment share, owing to the increasing focus by stakeholders such as developers and owners of commercial real estate (CRE) on the intelligent building to reduce operational costs. Governments across countries are scrutinizing the CRE to significantly invest and improve energy-saving building procedures.

The commercial segment is further categorized into hotel, healthcare, retail, corporate offices, and others.

Healthcare is expected to lead due to increasing demand for advanced systems to manage hospital operations.

The residential segment is likely to showcase rapid adoption of intelligent building solutions to manage safety and security, smart maintenance, energy consumption, and more. The increasing demand for smart home lighting, HVAC monitoring, smart door and locking system, and smart meters is expected to surge the intelligent building demand in residential applications.

REGIONAL INSIGHTS

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Geographically, the market is fragmented into five major regions such as North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. They are further categorized into countries.

North America is expected to dominate the regional revenue share during the forecast period. The prominent companies across the industries in the region are shifting toward intelligent building solutions to boost workplace operations. The U.S. led the region’s share, owing to increasing investments in green building technology. For instance, the U.S.-based Duke Energy Center, a 51-floor tower skyscraper, received the highest green certificate from LEED Platinum after implementing intelligent building infrastructure. As per the Smart Working report of Schneider Electric, the U.S.’s commercial real estate consumes around USD 179 billion in energy every year. This factor is likely to surge the demand for energy-efficient smart infrastructure in the region.

Europe to exhibit significant market share after North America. The growing European Union focus on implementing efficient energy-saving technologies in residential and commercial buildings is expected to fuel the smart building market share. The companies in Europe are focusing on employee wellbeing by adopting the WELL Building Standard certificate. Thus, the rising number of smart workplace buildings is likely to increase market opportunities.

Asia Pacific is expected to gain remarkable growth during the forecast period. Growing smart city projects are predicted to surge the intelligent building demand in the region. Further, the growing population in China and India is expected to drive the technology to manage urban space demand. Also, increasing government initiatives in developing smart commercial places, shopping malls, and localities to reduce energy consumption are expected to drive the market growth.

The Middle East & Africa gains significant growth rates due to increasing demand for energy-efficient smart building solutions. Additionally, the region is inclined toward reducing carbon emissions and adopts smart technologies to reduce such harmful gaseous emissions.

Similarly, Latin America showcases steady growth as the government aims toward efficient and sustainable building. For instance, the National Energy Conservation Program (PAR PROCEL) launch of the Resources Application Plan in Brazil is expected to fuel the demand for smart technologies to manage buildings.

KEY INDUSTRY PLAYERS

Growing Strategic Acquisition and Collaborations to Boost Key Players Market Position

The key players in the market for smart building are strategically entering into partnerships and collaborations to expand their market share. These players also partner with different rating and assessment certification providers to ensure the safety and quality of smart solutions. To expand their global presence, the players are acquiring local players across countries. Also, the market players are continuously investing in developing and launching new intelligent solutions and services for managing commercial and residential building operations.

May 2021 – Siemens AG collaborated with Telefónica Tech to offer intelligent building solutions and Spanish market services. The partnership also includes smart lighting, predictive maintenance, smart parking, de-escalation monitoring, environmental monitoring, occupancy, and capacity management.

March 2020 – ABB Ltd. announced the acquisition of Cylon Controls, an Irish company, to expand its market in the intelligent building segment. The company has gained access to HVAC control solutions through the acquisition, delivering operational efficiency, building automation, and energy & comfort solutions for commercial and retail buildings.

List of the Key Companies Profiled:

• Cisco Systems, Inc. (U.S.)


• Siemens AG (Germany)


• ABB Ltd. (Switzerland)


• Schneider Electric SE (France)


• Endeavor Business Media (U.S.)


• IBM Corporation (U.S.)


• Legrand SA (U.S.)


• Honeywell International Inc. (U.S.)


• Johnson Controls Inc. (U.S.)


• Hitachi, Ltd. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2021 – Endeavor Business Media launched intelligent building technology to integrate intelligent solutions for commercial and new buildings. Its new developments offer energy efficiency, communication system, intelligent system, health, and safety support.


• February 2020 – Honeywell International Inc. launched a cloud-based Forge Energy Optimization, an autonomous sustainability solution to manage energy consumption. The building solution aims to reduce energy consumption, lower carbon footprints, double-digit energy saving, and more.    

REPORT COVERAGE

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The global market research report highlights leading regions worldwide to offer a better understanding of the user. Furthermore, the research report provides insights into the competitive landscapes, latest industry, and smart building market trends and analyzes technologies deployed rapidly at the global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.

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