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The global smart building market size was valued at USD 80.60 billion in 2022 and is projected to grow from USD 96.96 billion in 2023 to USD 408.21 billion by 2030, exhibiting a CAGR of 22.8% during the forecast period.
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 the rise in smart city projects are expected to create lucrative opportunities for the growth of the industry. For instance,
Surge in Demand for Safe and Healthy Workplaces to Fuel Market Development
The reopening of commercial buildings post-pandemic for in-office work is expected to surge the demand for smart technologies for a safe environment. The commercial building facility managers and the corporate tenants must 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. These factors are expected to fuel the demand for smart building solutions.
Further, smart technology can be helpful in the future to track employee movement to limit 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.
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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, a high-level Expert Forum 2019 report shows that 70% of the world population is expected to shift to urban areas by 2050. This factor would surge the demand for buildings and spaces for sustaining livelihood and work requirements. Considering the urbanization trend, governments worldwide invest in smart city projects with advanced infrastructure, cleaner transportation, intelligent buildings, and other smart technology. Building contributes to the major energy consumption and investment, so developing connected buildings is an initial step toward smart city projects. For instance,
Thus, with rising smart city projects and investments, the demand for smart and connected buildings is expected to grow rapidly.
Growing Energy Consumption Concerns to Drive Market Growth
The growing concerns about 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, Internet of Things (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 market growth.
Growing Incidence of Cyber Attacks in Connected Buildings 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 the future. Thus, it is essential to implement contingent operational plans to ensure the safety of connected buildings from such attacks.
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Increasing Focus on Energy Saving to Propel the Solution Segment
Based on component, the market is bifurcated into solution and services.
The solution segment includes building infrastructure management, security & emergency management, and energy management. The solution segment is 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 savings.
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 the access control system, video surveillance system, and safety system.
Building infrastructure management is expected to grow steadily, owing to the rising challenges in optimizing high commercial building operational costs. It is further categorized into a parking management system, smart water management system, and elevators & escalators system.
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.
Growing Investment in Smart Technologies to Enhance Commercial Building Operational Efficiency
By application, the market is classified into residential and commercial.
The commercial segment is expected to dominate the segment, owing to 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 invest and improve energy-saving building procedures significantly.
The commercial segment is further categorized into hotel, healthcare, retail, corporate offices, and others.
Due to increasing demand for advanced systems to manage hospital operations, healthcare is expected to lead.
The residential segment is likely to showcase the 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 locking systems, and smart meters is expected to surge the intelligent building demand in residential applications.
North America Smart Building Market Size, 2022 (USD Billion)
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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. Prominent companies across regional industries 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, after implementing intelligent building infrastructure, the U.S.-based Duke Energy Center, a 51-floor tower skyscraper, received the highest green certificate from LEED Platinum.
Europe to exhibit significant smart building market share after North America. The growing European Union's focus on implementing efficient energy-saving technologies in residential and commercial buildings is expected to fuel the market share. European companies focus on employee well-being 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 is expected to drive the global market growth.
The Middle East & Africa has grown significantly 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.
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Similarly, Latin America showcases steady growth as the government aims for 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.
Growing Strategic Acquisition and Collaborations to Boost Key Players’ Market Position
The key players in the market 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. The players are acquiring local players across countries to expand their global presence. Also, the market players are continuously investing in developing and launching new intelligent solutions and services for managing commercial and residential building operations.
An Infographic Representation of Smart Building Market
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The 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 globally. It further highlights some growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.
CAGR of 22.8% from 2023 to 2030
Value (USD billion)
The market is projected to reach USD 408.21 billion by 2030.
In 2022, the market was valued at USD 80.60 billion.
The market is projected to grow at a CAGR of 22.8% during the forecast period.
The solution segment is expected to lead the market.
Growing energy consumption concerns will drive the market growth.
Cisco Systems, Inc., Siemens AG, ABB Ltd., Schneider Electric SE, Endeavor Business Media, IBM Corporation, and Huawei Technologies Co. Ltd. are the top players in the market.
North America is expected to hold the highest market share.
By application, the commercial segment is expected to grow with a remarkable CAGR during the forecast period.
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