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The global smart building market size was USD 57.30 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with the market witnessing a significant impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of 17.4% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 67.60 billion in 2021 to USD 265.37 billion in 2028 at a CAGR of 21.6% during the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
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 growing smart city projects is expected to create lucrative opportunities for the growth of the global market. For instance, in September 2019, to enhance the building efficiency, Coretrust Capital Partners implemented 5G from Connectivity Wireless Solutions to convert the Los Angeles tower into a smart and connected building.
Surge in Demand for Safe and Healthy Workplace to Fuel Market
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, space optimization for physical distancing. This is likely to fuel the demand for smart building solutions.
Further, smart technology can be helpful in the 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 the intelligent building solution opportunities that can 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 growth of the global smart buildings market 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 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. As building contributes to the major energy consumption and investment, developing connected buildings is an initial step towards smart city projects. For instance,
Thus, with the 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 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, the strict government on energy consumption and green building initiatives boosts the demand for energy-efficient technology across buildings. This is expected to propel the implementation of intelligent building solutions globally. According to the IBM Corporation report, implementing advanced technology, including artificial intelligence (AI), Internet of things (IoT), etc., helped reduce energy usage by 40% and 10%-30% in maintenance costs. Similarly, as per Deloitte’s report, the implementation of smart technology and IoT devices witnessed 70% energy saving in three years. This is likely to fuel the smart building market growth.
Growing Incidence of Cyber Attacks in Connected Building to Hamper Market Growth
The significant barrier to market growth is the growing cyberattack. 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 new report, four out of 10 connected buildings are at the risk of cyber-attacks. This high risk of cyber-attack is expected to hamper the future market growth. Thus, it is essential to implement operational contingent plans to ensure the safety of the connected building from such attacks.
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Increasing Focus on Energy Saving to Propel Smart Building Solution Demand
Based on the component, the market is bifurcated into solutions and services.
The services are likely to showcase rapid growth during the forecast period. This is attributable to the rising implementation of intelligent building solutions. The demand for professional services such as consulting services, system integration, and deployment, support, and maintenance, among others, is increasing.
The solution segment includes building infrastructure management, security & emergency management, and energy management dominating the market.
Energy management is expected to gain rapid growth due to increasing green building initiatives and stringent government regulation on energy consumption. For instance, Shanghai’s New Development Bank (NDB) implemented intelligent building solutions to monitor indoor lighting controls, electric curtains, and windows and witnessed more than 15% energy saving.
The security and emergency management solution is expected to gain maximum solution segment share. There is increasing demand for security systems, surveillance systems, advanced building operation services, and smart workplace solutions in commercial buildings. This is likely to drive security and emergency management solutions. It is further categorized into the access control system, video surveillance system, and safety system.
The building infrastructure management to gain steady growth owing to the rising challenges in optimizing large commercial building operational costs. It is further categorized into a parking management system, smart water management system, and elevators & escalators system.
Growing Investment on Smart Technologies to Enhance Commercial Building Operational Efficiency
By application, the global market for smart buildings is classified into residential and commercial.
The commercial segment is expected to lead and dominate the share owing to the increasing focus by stakeholders such as developers and owners of commercial real estate (CRE) on intelligent building to reduce operational costs. The governments across countries are scrutinizing the CRE to invest and improve energy-saving building procedures significantly.
The commercial segment is further categorized into the hotel, healthcare, retail, and others.
The healthcare sub-segment is likely to lead due to the increasing demand for advanced systems to manage hospital operations.
The residential 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 likely to drive the intelligent building demand in a residential application.
North America Smart Building Market Size, 2020 (USD Billion)
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Geographically, the key 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 to dominate the regional revenue share during the forecast period. The prominent companies across the industries in the region are shifting towards intelligent building solutions to boost workplace operations. For instance, US-based Duke Energy Center, a 51-floor tower skyscraper, received the highest green certificate from LEED Platinum after implementing intelligent building infrastructure. The United States led the region share owing to the increasing investments in green building technology. As per the 2017 Smart Working report of Schneider Electric, the country's commercial real estate consumes USD 179 billion in energy every year. This is likely to drive 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 likely to fuel 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 surge market opportunity.
Asia Pacific is expected to gain remarkable growth during the forecast period. Growing smart city projects is likely to drive the intelligent building demand in the region. Further, the growing population in countries like 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 likely to drive market growth.
The Middle East and Africa gain significant growth rates due to increasing demand for energy-efficient smart building solutions. Additionally, the region is inclined towards reducing carbon emissions; therefore, they adopt smart technologies to reduce such harmful gaseous emissions.
Similarly, Latin America to showcase steady growth as the government aims towards 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 for smart building are strategically entering into partnerships and collaboration to expand their market share. These players also partner with a different rating and assessment certification providers to ensure the safety and quality of smart solutions. The players to expand its global presence are acquiring the local players across the countries. Also, the market players are continuously investing in developing and launching new intelligent solutions and services for managing commercial and residential building operations.
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, energy and comfort solutions for commercial and retail buildings.
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.
An Infographic Representation of Smart Building Market
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The 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.
Value (USD Billion)
Component; Application; and Geography
The market is projected to reach USD 265.37 billion by 2028.
In 2020, the market was valued at USD 57.30 billion.
The market is projected to grow at a CAGR of 21.6% during the forecast period.
The solution is likely to lead the market.
Growing energy consumption concerns to 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.
The residential segment is expected to grow with the remarkable CAGR.
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