Smart Building Market Report Scope & Overview:

The Smart Building Market was valued at USD 99.6 Billion in 2023 and is expected to reach USD 663.6 Billion by 2032, growing at a CAGR of 23.47% from 2024-2032.

Increasing urbanization, technological advances, and the rising need for energy efficiency drive significant growth in the Smart Building Market. Smart buildings maximize energy use, boost security, and improve occupant comfort using modern systems like IoT, AI, and automation. To create smart structures, these devices are connected to monitor and control systems such as lighting, HVAC, access control, and water use in real-time. Statistics show that more than 40% of total energy consumption comes from buildings, which draws singular attention to the need for energy-efficient solutions. Smart buildings can reduce energy costs by as much as 30% between commercial and residential, providing a strong value proposition. A huge factor driving growth is the proliferation of IoT-powered solutions, which is expected to lead to the installation of over 15 billion IoT devices deployed at smart buildings by the end of 2025. In addition, the increasing emphasis on sustainability and compliance with green building standards like LEED and BREEAM is propelling the adoption of smart technologies. Apart from this, governments across the globe are establishing stringent energy efficiency policy mandates and incentives to accelerate smart building adoption.

The transition to remote and hybrid work has also increased the need for integrated workplace management systems to make the best use of space and create safe, productive spaces. Moreover, the innovation of 5G and edge computing to transmit data quickly and reliably is extending the reliability of smart building system functions. However, high random costs along with cyber danger attached to cyber ahead technology are essential barriers, innovation in cloud-based edges-fitting technology and artificial intelligence fire ahead maintenance degree have mitigated this to a big degree. Hence, the Global Smart Building Market is poised for continued expansion as the world strives for efficiency, sustainability, and improved occupant experiences.

Market Dynamics

Drivers

• Rapid urban growth and smart city initiatives fuel infrastructure investments.

The growing need for advanced infrastructure for increasing population per area and the urban issues related to it such as solid waste management, effective transport systems, and maintenance of the environment is the major reason driving the smart building market, owing to the growth of smart buildings to take rapid growth due to rapid urbanization and following up the government initiatives of the smart city. Smart cities aim to enhance the quality of life for urban residents by integrating technology into infrastructure, transportation, energy, and building management systems. In this scenario, smart buildings serve as a fundamental element of smart city development, providing energy-efficient, sustainable, and interoperable solutions. With IoT-based devices, such buildings facilitate real-time monitoring, automation, and resource optimization so energy can be used efficiently, minimizing operational costs.

With urbanization zooming in at an unprecedented pace, the governments along with several private investors are investing in modern infrastructures to meet the ever-increasing demand for housing, commercial spaces, and public amenities. Integration of renewable energy systems and energy storage in smart buildings promotes sustainable urban development by reducing CO2 emissions, which is one of the key features of smart city development. Smart city initiatives normally have regulatory and financial mechanisms in place to spur the adoption of smart technology, accelerating the rollout of smart building solutions. As urban populations are projected to significantly increase in the next few decades, the integration of smart buildings into urban planning is vital to enable sustainable, technology-driven, and habitable cities. Such a trend is expected to remarkably enhance the global amount of the Smart Building Market in the near future.

• Enhanced connectivity and automation enable real-time monitoring and optimization of building systems.

• Stringent energy efficiency mandates and incentives boost smart building adoption.

Restraints

• Concerns over data collection and usage in smart building systems create trust issues among users.

Perceptions of data collection and usage in smart building systems have emerged as a significant barrier in the Smart Building Market as it creates positive trust and privacy challenges for the user. IoT-Based Device Modeling and Sensor Needed for Smart Buildings Smart buildings rely on IoT-Connected devices and hardware chips, sensors, and non-tangible AI platforms to monitor functions such as energy consumption, lighting, HVAC, and security. They produce high volumes of data, including sensitive information on the building occupants such as their movements, preferences, and behaviors. Although these data are essential for increasing operational efficiencies and occupant comfort, this data also poses a risk if not properly managed, secured, and protected. As cyber threats continue to grow in complexity, users are becoming more sensitive to privacy risks such as unauthorized access, data misuse, and breaches. This lack of uniform policies and ambiguity on data collection and usage worsens such apprehensions, causing some users to shy away from the smart technology.

For example, privacy legislation such as the GDPR or CCPA may cause building owners and managers to wait before implementing smart systems. To counter these issues, it is important to provide security measures like encryption, secure data storage, and access controls as well as a clear policy regarding how the data how which data is collected, stored, and utilized. To tackle these challenges, trust needs to be created — through certifications, third-party audits, and conformance to international data privacy regulations. With increasing awareness and solutions for data privacy, the Smart Building Market can try to eliminate trust issues and achieve a larger market acceptance in the future.

• Increased connectivity in smart buildings exposes systems to potential cyber threats and data breaches.

• Compatibility issues with legacy systems hinder seamless implementation of smart technologies.

Segment Analysis

By Solution

The safety & security management segment dominated the market and a represented significant revenue share of more than 37% in 2023. This area includes integrated management, interfaces with other in-house systems, and data collection & analysis. The availability of advanced safety and security devices with Internet Protocol-enabled capabilities, is galvanizing the deployment of smart building solutions that offer facilities managers sophisticated instruments to strengthen the safety and security of building and this is a major factor driving the growth of the global smart buildings market. Moreover, increasing governmental regulations for building safety and security are estimated to propel the growth of this segment over the forecast period.

Energy Management segment is expected to register the fastest CAGR during the forecast period. The rise in the uptake of Energy Management systems by residential, commercial, and industrial buildings is propelling rapid growth. Manufacturers are providing sustainable smart home energy solutions, which are gaining adoption from a large customer base.

By Services

The implementation segment dominated the market and captured a market share of more than 46% in 2023. The expanding adoption of smart building software and services in multiple industries has led to this growth. Service providers begin by connecting systems that are already implemented: fire alarms, water pumps, power meters, lighting,  heating, and their sensors and control systems to create a smart building. Implementation services providers help building owners, facility managers, and operators in deploying and optimizing these foundational systems. These implementation services are beneficial and are expected to result in the continuing growth of the segment through 2032.

The support and maintenance segment are expected to grow at the fastest CAGR during the forecast period. This segment is expected to experience significant opportunities with an increased push on smart buildings worldwide. Support and maintenance services incorporate general support, maintenance, and upgrades for smart building management solutions. Such service providers also facilitate efficient, cost-effective operations for smart building operators through intelligent automation techniques. Support and maintenance services provide various capabilities that are likely to continue driving growth in this segment from 2024 to 2032.

By End -Use

The commercial segment dominated the market and represented a significant revenue share in 2023. The higher segment share is attributed to the increasing adoption of smart building solutions in IT companies, shopping malls, stadiums, and healthcare. The growth of the commercial sector has been fueled by companies in the market developing different technology solutions designed to provide superior solutions to different enterprise needs.

The residential segment is projected to attain the fastest CAGR over the forecast period. The residential segment growth is driven by the demand for Heating, Ventilation, & Air Conditioning management, smart door lock security systems, smart home lights, and Smart Meters to manage and monitor the mechanical and electrical systems of the building. Consumers used video doorbells to maintain a contactless lifestyle, robotic vacuum cleaners to clean their houses, and high-end security cameras for safety. In addition, the segment is projected to gain from high-speed power line communication, the uptick in the consumer electronics industry, and increasing disposable income in developing countries.

Regional Analysis

In 2023, the North American region dominated the global smart building market and held the largest market share at 39%. The growth of the regional market is due to the modernization of digital infrastructure solutions and increasing public & private investment in smart city solutions. Firms competing in the North American smart building market are introducing innovations in order to sustain a competitive advantage over their competitors.

The Asia Pacific smart building market is projected to be the most rapidly growing regional market with a CAGR of 24.62% during the forecast period. The growth can be accredited to the increasing high urbanization, internet penetration the emerging awareness of consumers towards the adoption of smart buildings due to the use of remote management services through IoT technology. Smart building infrastructure,  billions pouring from Singapore, Japan, India, China et al. The enhancement creating attention of the customers modernize their old roofs into intelligent buildings is the factor propelling the Asia Pacific market growth.

Key Players

The major key players along with their products are

• Schneider Electric – EcoStruxure Smart Building

• Honeywell International – Honeywell Building Management Solutions

• Johnson Controls – Metasys Building Automation System

• Siemens AG – Desigo CC

• Bosch Security Systems – Bosch Building Integration System

• ABB Ltd. – ABB Ability Building Automation

• Legrand – Legrand Smart Building Solutions

• Lutron Electronics – Lutron HomeWorks QS

• Trane Technologies – Trane Smart Thermostat

• Philips Lighting (Signify) – Interact Pro

• Cree, Inc. – Smart LED Lighting Solutions

• BuildingIQ – Energy Optimization Platform

• Crestron Electronics – Crestron Home Automation

Recent development

• In September 2024, UnaBiz unveiled three IoT solutions targeting the smart building sector at BEX Asia 2024. These solutions aim to automate monitoring, optimize operations, and assist building owners in meeting sustainability goals by reducing waste and enhancing efficiency. 

• In June 2024, Schneider Electric launched the SMART Buildings Division, aiming to provide comprehensive solutions and services to support building owners and operators in achieving decarbonization and sustainability goals. 

• In April 2024, Siemens Smart Infrastructure introduced Electrification X, a scalable Internet-of-Things (IoT) Software-as-a-Service (SaaS) offering designed to transform electrification infrastructure.