Smart Building Market Size, Share & Trends Analysis Report By Component (Software, Hardware, Service), By End-User (Commercial, Residential, Industrial), By Solution (Safety & Security Management, Energy Management, Building Infrastructure Management, Integrated Workplace Management System (IWMS), Network Management) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global smart building market size was valued at USD 78.77 billion in 2022. It is projected to reach USD 167.30 billion by 2031, growing at a CAGR of 8.73% during the forecast period (2023–2031). Due to the factors such as increasing demand for energy-efficient systems and emergence of 5g technolgy significantly drives the smart building market demand by 2031.

Automated building, another name for a smart building, describes a structure that uses intelligent technology. When people talk about "smart buildings," they refer to dorms, offices, hospitals, museums, schools, shopping centers, and even outdoor spaces. An integral part of the infrastructure of a smart building is real-time systems that allow for centralized control of all the building's functions. Smart building technology is employed to improve the building's utility, security, environmental friendliness, and cost-effectiveness. Smart building solutions align with property owners' objectives because they increase safety, comfort, efficiency, and savings. Researchers at Honeywell estimate that eighty to ninety percent of a person's lifetime is spent in enclosed spaces.

Market Dynamics

What are the Primary Factors driving the Market for Smart Building?

Increasing Demand for Energy-Efficient Systems

Energy use in buildings accounts for the vast majority of all consumption. They use nearly 40% of the world's total energy. Energy-efficient buildings are now necessary to help lower global greenhouse gas emissions. Optimizing energy consumption and cutting costs are two essential functions of a building's management system. This way, HVAC and other techniques can be monitored and controlled more effectively. By identifying issues with the functioning of different equipment, building analytics aids in the early diagnosis of problems, thereby decreasing the overall cost of maintaining a building. The smart building market growth can be attributed to the increasing demand for and price of clean, optimized, and automated energy.

What are the Main Factors that will slow down the Market for Smart Building?

High Cost of Implementation

The complexity of integration with a given application significantly impacts overall costs, which is something other than what building owners consider. Customers want efficient energy-saving systems but need to comprehend the magnitude of the potential savings. As much as a quarter of a building's total energy bill is attributable to lighting. Lighting control systems can improve lighting quality while decreasing environmental impacts and saving 30-60% on lighting costs. Smart building solutions could be hindered in their global expansion by the widespread belief that they are prohibitively expensive to implement and by a lack of knowledge about the long-term cost savings resulting from their use.

What are the Future Opportunities for Smart Building?

The Emergence of the 5G Technology

With the advent of 5G technology, cutting-edge, highly effective capabilities for intelligent buildings are expanded. Its effective real-time operational and analytical capabilities make it a crucial cog in the expansion of loT-enabled devices. Lora WAN enables devices in smart buildings to generate massive amounts of data, but 5G technology allows rapid infrastructure development for data transport, interpretation, and efficient, cost-effective action. Building the Internet of Things (BloT) and Al-enabled innovations made possible by 5G significantly improve the user/occupant experience. The Global System for Mobile Communications (GSMA) predicts that by 2025, global investments in 5G networks will total USD 1 trillion. Furthermore, the global 5G network will serve a longer investment cycle than 4G, suggesting that the two systems will coexist into the 2030s.

Regional Analysis

The global smart building market share is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America is the most significant shareholder in the global smart building market and is expected to grow during the forecast period. The area's high consumer spending and tech-savvy populaces fuel the region's booming economy. People are expected to embrace new technologies quickly. In addition, when selecting a structure for personal or professional use, they look for ease of use, security, and streamlined management. The United States and Canada have significantly contributed to advancing technology in this area. Market growth in this region has been aided by factors such as rapid digitalization across industry verticals, rising adoption of smart connected devices, and rising technological advancements. In addition, the government's initiatives and awareness plans for smart buildings that save energy and money propel the region's market expansion.

Asia-Pacific is expected to grow during the forecast period. As smart technology is implemented in more public spaces like shopping centers, neighborhoods, and workplaces, new opportunities are expected to emerge, fueling the intelligent building market. In addition, businesses in the Asia-Pacific area are improving smart building services by creating IoT-enabled building management systems. China and Japan have significantly contributed to the advancement of technology in the region. For instance, Chinese and Japanese companies are heavily investing in smart building transactions, such as the incorporation of building systems and building controls, to improve energy efficiency and storage and disperse safer, smarter, and more sustainable buildings in the region.

In Europe, demand has been spurred by expanding government support for the design of high-tech structures. Countries like Sweden, Finland, Denmark, and the Netherlands are at the forefront of smart building policy development in Europe. Government initiatives to increase energy efficiency have significantly influenced the region's adoption of smart building solutions. Smart building solutions are also expected to be adopted by the manufacturing sector to boost output, cut expenses and energy consumption, enhance security, and facilitate better identification and access control.

Latin America, the Middle East, and Africa have the smallest market share of any region. Most countries aren't making significant headway in the market or promoting the widespread adoption of onsite energy storage. In response to the increasing demand for more modernized and automated products, devices, systems, sensors, and solutions, businesses are forming strategic alliances and contracts, broadening their market presence, and developing new products to meet this demand and strengthen their positions in the market.

Segmental Analysis

The global smart building market share is segmented by component, end-user, and automation type.

Based on components, the global smart building market share is bifurcated into software, hardware, and service.

The service segment is the highest contributor to the market and is expected to grow during the forecast period. Consulting, rollout, and upkeep are subsets of Smart buildings solutions. The market services sector is growing due to the rising demand for smart building solutions that enhance facility performance and management. The drive for efficiency and sustainability will also propel the market. Because of its centrality to efficient management and operation, grasping this concept has inevitably presented its fair share of difficulties for would-be financiers. Occupancy sensors allow lights to be turned off automatically when they detect empty rooms. The adoption of smart HVAC devices is driven by their cutting-edge features and user interfaces, which allow for connectivity to the internet and remote access via mobile apps.

Based on end-user, the global smart building market share is bifurcated into commercial, residential, and industrial.

The commercial segment is the highest contributor to the market and is expected to grow during the forecast period. Increased adoption of green and smart building solutions and technologies, as well as a greater emphasis on reducing carbon footprints through decreased reliance on fossil fuels, increased energy optimization, and decreased energy consumption, are to thank for this. The commercial sector accounts for a sizable chunk of the global market. This sector includes large office buildings, commercial parks, malls, shopping stores, hotels, restaurants, and other non-manufacturing commercial buildings that employ automated technology. Hotel buildings, which use climate control, room access, and other features to enhance the guest experience, are anticipated to be a significant growth driver in the intelligent building market.

Based on automation type, the global smart building market share is bifurcated into building energy management systems, infrastructure management systems, communication and network management system, and others.

The building energy management segment is the highest contributor to the market and is expected to grow during the forecast period. The energy consumption of a structure can be tracked and managed with the help of a Building Energy Management System (BEMS). It's more than just an energy management system; it can regulate the HVAC, lighting, and security of any building, whether a home or a business. Building energy management systems (BEMS) are used in a wide variety of structures worldwide to control energy consumption efficiently. BMSs are gradually replacing BEMSs worldwide because they are not limited to energy management but include all computer-based control systems (such as those for lighting, elevators, and security).

Impact of covid-19

The pandemic had caused a lockdown in almost all the countries across the world backed up by strict government regulations such as social distancing and quarantine. A severe effect of the lockdown was observed on the economy of various countries which further canceled certain construction projects temporarily or permanently.

Further, immediate long-term effects were seen in the supply chain and the deployment of smart solutions required in the smart buildings. However, the ease offered and the multiple benefits of the smart building solutions are anticipated to increase the deployments during the time.

Recent Developments

• February 2022- Honeywell Introduces an Indoor Air Quality (IAQ) Monitor to Assist Building Owners in Identifying Opportunities for Improvement.
• June 2022- Schneider Electric holds its "Innovation Day" in Goa to promote its sustainable and cutting-edge products for the commercial and residential markets.