Smart Building Market

The global Smart Building Market is valued at USD 85.1 Billion in 2023 and is projected to reach a value of USD 230.9 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 11.73% between 2024 and 2032.

Key highlights of Smart Building Market

• North America dominated the market in 2023, obtaining the largest revenue share of more than 31.8%,
• In 2023, the Asia Pacific region accounted for a substantial market share and is further expected to record a CAGR of 14.81%,
• The Safety and security management segment dominated the market with 33.7% of the market share in 2023,
• The implementation segment will continue to assert its dominance by services, capturing the largest market share,
• Commercial dominated the market with a significant market share of 51.5% in 2023,
• Demand for Smart Buildings is driven by the growing need to improve the utilization of buildings and building sites, as well as greater resource management in cities.

Smart Building Market: Regional Overview

North America Dominated Sales with a 31.8% share in 2023. Several important factors contributed to this dominance. In the next five to six years, Canada and The United States play a pivotal role in developing technological progress across this industry. Rapid digitalization across various sectors and a surge in the adoption of smart connected devices will aid in market growth significantly. Recently, there have been government initiatives to encourage energy efficiency and cost-effectiveness further supporting the expansion. In particular, the constant innovation of industry players has maintained North America's market dominance. Rogers Communications Inc.'s recently expanding its portfolio of Smart Building solutions on the Internet of Things, such as indoor air quality monitoring and intelligent bathroom equipment, illustrate this trend.

U.S. Smart Building Market Overview

The U.S. Smart Building market, valued at USD 20.42 Billion in 2023 to USD 22.97 Billion in 2032 is anticipated to grow at a CAGR of 12.49 % from 2024 to 2032. The well-developed infrastructure around the country with high-speed internet and a growing number of users makes the U.S. the largest market in the region to integrate the Internet of Things (IoT), A.I., and Smart Buildings. Moreover, the reduction of costs for semiconductor sensors and technologies that support innovation as well as favorable consumer spending patterns and a strong entrepreneurial ecosystem are driving industry expansion. To lead the overall global Smart Building market, the U.S. remains a significant player due to the number of ongoing IoT projects related to smart and connected buildings, smart cities, and smart energy.

The global Smart Building market can be categorized as Solutions, Services, Building Type, and Region.

Smart Building Market: Solutions Overview

In 2023, the security & emergency management (SEM) segment dominated the market with a 33.7% market share owing to the growth in digital disruption in people's everyday lifestyles contributing to the growth in demand for smart infrastructure solutions, which in turn strengthened the demand for real-time security & emergency management. The {Keyword}} market, is segmented by Safety and security management, Energy management, Building infrastructure management, Network management, and IWMS. Intelligent evacuation systems, which combine the Internet of Things with fog layers and clouds, will drive the demand for SEMs in Smart Buildings. To track their movements and automatically count people who have arrived at a designated rendezvous or gathering point, Internet of Things technologies are used to collect information about the environment and occupants' location. In Addition, as demand for green and sustainable building management solutions is contributing to market growth, the workforce management segment is expected to grow at a higher rate over the next few years.

Smart Building Market: Services Overview

In 2023, the implementation segment accounted for over 34.1% of the market share. The services segment is divided into Consulting, Implementation, and Support and maintenance. The growing adoption of intelligent building software and services in different sectors of the economy is attributed to segment growth. Service providers first connect basic systems, e.g., fire alarms, water pumps, power meters, lighting, and heating, to sensors and control systems to develop an intelligent building. Implementation service providers are assisting building owners, facilities managers, and operators in using the essential systems more effectively. The segment's growth is anticipated to record a significant growth by 2032 due to these benefits from implementation services.

Smart Building Market: Building Type Overview

The Commercial segment accounted for the largest market share of 51.5% in 2023. Building Type segment is bifurcated into Commercial, Residential, and Industrial. The increased use of Smart Building solutions in IT companies, shopping malls, sports stadiums, and healthcare is a major factor driving the segment's share. Market participants have developed various technological solutions to offer better solutions, driving growth in the commercial sector. For example, ABB Ltd. launched a new Smart Building management tool in March 2023 called the ABB Ability Building Analyzer to enable commercial builders to reduce energy consumption and emissions.

Key Trends

• Smart Buildings can make more informed decisions by integrating data analytics and artificial intelligence. To optimize energy consumption, predict maintenance needs, and improve security, building management systems analyze data from sensors and Internet of Things devices. This leads to more effective construction operations and cost reductions.
• Internet of Things (IoT) is revolutionizing Smart Buildings. The collection and transmission of data from various building functions, such as lighting, air conditioning systems, security & utilities, is being carried out using Internet of Things devices and sensors. This information is used to optimize the functioning of buildings, reducing energy consumption and improving comfort for occupants.
• Cyber security is a major concern due to the growing connectivity and exchange of data in intelligent buildings. Adequate cybersecurity measures for the protection of sensitive data and infrastructure are being adopted by building owners and technology providers. To guarantee data integrity and privacy, this shall include encryption, monitoring of the network as well as periodic security checks.
• The main priorities are sustainability and energy efficiency of buildings. Green technologies such as solar panels, advanced insulation, and energy-efficient lighting and air conditioning systems are also incorporated into Smart Buildings. These features contribute not only to reducing the impact on the environment, but also leading to significant cost savings for building owners.

Premium Insights

Increasing government initiatives to reduce energy consumption is one of the main factors driving growth in Smart Buildings market. In 2023, China's government invested more than USD 38.92 billion in Smart Cities projects, according to the U.S. and Chinese Economic and Security Review Commission. Furthermore, the increasing need to use buildings more effectively, as well as the requirement to improve resource utilization in urban environments, is leading to an increased rate of adoption of intelligent buildings. According to unep.org (UN Environment Programme), buildings use about 40% of global energy, 25% of global water, and 40% of global resources, emitting approximately 1/3 of GHG emissions. The growth of the intelligent building market is also driven by a need to protect people and property. However, the market is hindered by a lack of funding and adequate infrastructure because of data security concerns related to intelligent buildings. In parallel, many opportunities for market expansion are expected to arise during the forecast period as Smart Buildings become increasingly able to use artificial intelligence and Internet of Things applications in intelligent buildings.

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Market Dynamics

Effective management through smart solutions optimizes energy use, reduces costs, and promotes sustainability

The largest energy user is buildings. They're consuming about 40% of the world's energy consumption. Energy-efficient buildings are becoming a necessity all over the world to mitigate greenhouse gases. Energy-efficient buildings are becoming a necessity all over the world to mitigate greenhouse gases. To optimize the use of energy and reduce costs, it is necessary to manage buildings. A significant insight into energy usage in all building infrastructure is generated by intelligent construction solutions. They're helping to monitor and control the heating, ventilation, and air conditioning systems efficiently. Building Analytics enables the identification of problems with a variety of equipment, which will allow it to be more efficient in identifying them and thus reduce maintenance costs. Advanced technologies and systems that produce clean, optimized energy for the Smart Building market are available to implement due to rising energy consumption and costs.

5G enhances intelligent building capabilities, enabling real-time operations and analytics, expanding IoT device connectivity

The deployment of 5G technology will enhance new and efficient intelligent building capabilities. By enabling efficient real-time operations and Analytics capabilities, it plays a crucial role in extending the Internet of Things to devices. The proliferation of IoT-enabled devices in Smart Buildings leads to vast data generation, but 5G technology expedites data transport, interpretation, and cost-effective actions. 5G notably elevates user experience and fosters numerous innovative and practical AI-enabled advancements in Building IoT (BIoT). The GSMA estimates that investments in 5G networks will reach USD 1 trillion globally by 2025, with a longer investment cycle than 4G, which indicates the coexistence of 4G and 5G over the next few decades.

Integration complexity affects building costs. Users seek cost-effective energy systems but underestimate long-term savings

The owners of buildings do not realize that, in particular, the complexity of integration issues associated with specific applications is a key factor affecting costs. Users demand energy savings systems that are cost-effective, but they do not realize the scale and long-term benefits of these savings. Lighting accounts for about 25% of the building's energy consumption, as a rule. It is possible to reduce the cost of illumination by 30 to 60%, while improving light quality and reducing impact on the environment through control systems for lights. According to Verdantix's June 2023 article, the integration of predictive energy information with automatic building control could allow companies to save 20% annually on energy consumption by optimizing asset running in response to changing energy prices and space utilization. The deployment and growth of Smart Building solutions across the world can be hindered by a perception that implementing an Analytics solution on buildings costs too much, as well as a lack of awareness about its long-term cost savings.

Competitive Landscape

Due to the large number of players in the market, the global Smart Building market is fragmented and fiercely contested. New developments and investments in the market are increasingly pursued by some well-established operators to increase their market position. To further enhance their products and gain a competitive edge on the market, companies can be seen taking part in M&A and partnerships. To acquire new customers and increase their market share, they are actively engaged in the development of new products as well as improving current ones. For instance, the partnership with Caverion was concluded in September 2022. The accelerated development of sustainable and energy-efficient buildings is a major objective of the partnership. The partnership aims to offer customers innovative, clever solutions for building carbon-neutral buildings and jointly achieving their sustainability objectives.

The key players in the global Smart Building market include - ABB Ltd. (Switzerland), BOSCH (Germany), Cisco Systems Inc. (U.S.), Emerson Electric Co. Ltd. (U.S.), Hitachi Ltd. (Japan), Honeywell International Inc. (U.S.), INTEL Corporation (U.S.), Johnson Controls (Ireland), KMC Controls (U.S.), LG Electronics Inc. (South Korea), Legrand (France), Schneider Electric SE (France), Siemens (Germany), Sierra Wireless (Canada), Telit (U.S.), Aliens Group (India) among others.

Recent Market Developments

• In February 2023, to digitally transform buildings and facilities into healthier, safer, and more sustainable environments for their customers and occupants, Johnson Controls, the world leader in smart, healthy, and sustainable buildings, together with Willow, a leading provider of digital twin solutions integrated for developing sustainable and healthier infrastructure.
• In September 2023, BT and Johnson Controls collaborated to help business customers in the UK and internationally benefit from Smart Buildings technology to digitally monitor, analyze, and optimize energy use in workplaces.
• In April 2023, Siemens and IBM worked together to develop a single software solution that is integrated with their services in the areas of System Engineering, Service Life Cycle Management, and Asset Management.