The Smart Building Market is projected to reach $152.93 billion by 2029, at a CAGR of 11.2% during the forecast period of 2022–2029. The growth of this market is attributed to the increasing demand for energy-efficient buildings, rising green city projects and shifts towards green and smart buildings, and the rising number of connected devices in buildings. In addition, the proliferation of smart cities, rapid urbanization in emerging countries, and government initiatives & incentives are expected to offer significant opportunities for the growth of this market. However, high implementation costs restrain market growth to some extent.
Impact of COVID-19 on the Smart Building Market
Governments worldwide imposed countrywide lockdowns to control the spread of COVID-19. The lockdown restrictions impacted manufacturing operations, with production facilities either completely shutting down or running at reduced capacities to ensure social distancing and employee safety. Most industries came to a standstill due to raw material & workforce shortages, supply chain disruptions, and restrictions on international trade. The pandemic impacted many businesses, including smart buildings.
The pandemic dramatically affected operations and business activities in the building technologies industry; however, most segments of this industry bounced back in the first quarter of 2021. Heating, ventilation, and air conditioning (HVAC) equipment, sensors, and controls; building automation system controls; light-emitting diode (LED) lighting; and fire safety and security systems suffered significant negative impacts due to manufacturing plant shutdowns, supply chain disruptions, and an acute drop in consumer demand caused by lockdowns and closures of commercial and industrial buildings around the world. According to CABA intelligent buildings and COVID-19 report, the key segment of the building technologies industry is facilities management, which normally contributes 70 percent of overall industry revenue. It witnessed a decline in the first half of 2020.
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However, in the later period, the pandemic also had a positive impact on the global smart buildings market as smart building technology can enable more efficient facilities management and help support a safe and healthy environment. Real estate companies collaborate with software companies to implement smart building management solutions for visitor management, smart security, and integrated technological solutions. The focus shifted to residential properties and the upgradation of homes due to more time spent indoors during the pandemic. According to a recent Honeywell report, Rethinking Buildings Post-COVID-19, as of 2021, 75% of surveyed U.S. facility managers say COVID-19 has caused them to rethink how their facility operates permanently. Nearly 60% are more likely to invest in indoor air quality optimization and other healthy building solutions, rising to 70% who are willing to invest in smart building solutions that help drive efficiency and support sustainability efforts.
Furthermore, the key players operating in the market are creating products that suit the customers' needs and offering better industrial solutions in automation and high-end commercial and residential properties. Hence, some companies are collaborating to strengthen their offerings further and keep making revenue to run their businesses. For instance, in February 2021, the latest version of Metasys building automation system, Metasys 11.0, by Johnson Controls (Ireland), has improved cybersecurity capabilities and system performance. Thus, the COVID-19 pandemic has accelerated the adoption of Smart Buildings.
The Rising Need for Energy-Efficient Buildings is Expected to Drive Smart Building Market Growth
Technological advancements have constantly increased daily energy consumption since the industrial revolution. Technological changes and lifestyle changes have increased the energy demand tremendously. With resources becoming scarce and energy costs growing, it becomes imperative for everyone to save energy or use the available energy carefully. According to Weforum, buildings are responsible for 40% of global energy consumption and 33% of greenhouse gas emissions. Ensuring new buildings are sustainable and energy-efficient will be key to our efforts to tackle climate change.
IoT and AI can make buildings' energy consumption more sustainable in smart buildings by changing HVAC settings to account for temperature, occupancy and fluctuating energy prices. Today's best-performing smart buildings use cutting-edge IoT technologies, powerful software, and AI to create a healthier, more comfortable occupant experience and improve employee productivity. Forward-looking companies worldwide are embracing digital transformation to make their existing building energy efficient, save energy, shrink their carbon footprint and reduce operating costs, driving the smart buildings market growth.
Many commercial buildings already have a fair amount of smart technology installed, from centrally controlled heating, ventilation and air conditioning systems (HVAC) to remote security systems. The residential sector is also stepping into the smarter world, with newer buildings coming complete with connected technologies.
Key Findings in the Smart Building Market Study:
In 2022, the Solution Segment is Expected to Dominate the Smart Buildings Market
Based on offering, the smart buildings market is segmented into solutions and services. In 2022, the solution segment is expected to account for the largest share of the global smart buildings market. The large market share of this segment is mainly attributed to the shift towards smart buildings and associated technologies, favorable government policies and support for green buildings, improved cost-effectiveness through energy saving, and the use of more efficient and energy-efficient lighting systems.
However, the services segment is expected to register the highest CAGR during the forecast period. The growing concern of organizations to gain visibility for diagnosing and troubleshooting problems before they impact operations or end-user experiences is expected to drive the adoption of smart building services. Furthermore, technical support and upgradation of smart buildings solutions are also necessary to ensure optimum utilization of these solutions, which supports the growth of the smart buildings services market.
In 2022, the Commercial Segment is Expected to Dominate the Smart Buildings Market
Based on end user, the smart buildings market is broadly segmented into residential, commercial, and industrial. In 2022, the commercial segment is expected to account for the largest share of the global smart buildings market. The growth of this segment is attributed to the increasing focus by stakeholders such as developers and owners of commercial real estate (CRE) on intelligent buildings to reduce operational costs. Governments are scrutinizing CRE to significantly invest and improve energy-saving building procedures.
However, the residential segment is projected to record the fastest growth rate throughout the forecast period. The increasing demand for smart home lighting, HVAC monitoring, smart door locking system, and smart meters is expected to drive segment growth.
Asia-Pacific to be the Fastest Growing Regional Market
Based on geography, the market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. Asia-Pacific has seen significant growth in the smart buildings market in recent years and is projected to register the highest CAGR during the forecasted period. A surge in government initiatives to promote energy-efficient building systems, an increasing number of smart city projects, and increasing investments by the government in public infrastructure are increasing the growth of the smart buildings market in the region. Shifting consumers' focus toward converting their existing buildings into smart ones also boost the regional market growth.
Key Players
The report includes a competitive landscape based on an extensive assessment of the key growth strategies adopted by the leading market participants in the smart buildings market between 2020 and 2022. The key players profiled in the smart buildings market report are 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 (France), Honeywell International Inc. (U.S.), Johnson Controls Inc. (U.S.), Hitachi, Ltd. (Japan), Huawei Technologies Co., Ltd. (China), Intel Corporation (U.S.), PTC Inc. (U.S.) a subsidiary of Rockwell Automation, Inc. (U.S.), Telit (U.S.), Robert Bosch GmbH (Germany), KMC Controls (U.S.), Verdigris Technologies (U.S.), Auqicore (U.S.), BuildingIQ, Inc. (U.S.) a subsidiary of mCloud Technologies Corp. (Canada), and Entouch (U.S.).
Scope of the report:
Smart Buildings Market by Offering
-
Solution
- Services
- Consulting
- System Integration & Deployment
- Support & Maintenance
Smart Buildings Market, by End User
- Residential
- Commercial
- Industrial
Smart Buildings Market, by Geography
- North America
- Europe
- U.K.
- Germany
- France
- Italy
- Spain
- Denmark
- Netherlands
- Sweden
- Rest of Europe
- Asia-Pacific
- China
- India
- Japan
- South Korea
- Singapore
- Australia & New Zealand
- Rest of Asia-Pacific
- Latin America
- Brazil
- Mexico
- Rest of Latin America
- Middle East & Africa
- UAE
- Israel
- Rest of the Middle East & Africa
Key questions answered in the report: