Global Smart Building Market Outlook, 2029

Smart buildings, also known as intelligent or automated buildings, are not a thing of the distant future anymore. They are rapidly becoming the new standard in construction and building management, leveraging advanced technologies to enhance efficiency, comfort, and sustainability. A smart building is a structure that uses automated processes to automatically control the building’s operations such as heating, ventilation, air conditioning, lighting, security, and other systems. It employs a combination of technology, artificial intelligence, and internet connectivity to create a comfortable, energy-efficient, and secure environment for its occupants. In the landscape of modern architecture and urban development, the concept of ""smart buildings"" has emerged as a groundbreaking paradigm shift. These innovative structures are not merely bricks and mortar; they are infused with cutting-edge technology, connectivity, and sustainability features that redefine the way we interact with our environments. From energy efficiency to occupant comfort, smart buildings offer a glimpse into the future of urban living. The concept of smart buildings is rapidly gaining traction worldwide, transforming the way we design, construct, and manage our built environment. The penetration of smart buildings into the market is driven by various factors, including the growing demand for energy efficiency, enhanced comfort, and sustainable practices. The penetration of smart buildings is set to revolutionize the construction and building management industries. It will necessitate the adoption of new construction techniques, the integration of advanced technologies, and the development of new skills among industry professionals. Moreover, the increased penetration of smart buildings will lead to a data-driven approach to building management, enabling more informed decision-making and predictive maintenance. This shift will require the development of robust data management and analytics capabilities. 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 the rise in smart city projects are expected to create lucrative opportunities for the growth of the industry. For instance, in December 2021, the National University of Singapore (NUS) Department of the Built Environment introduced a new research center to promote the adoption of 5G technologies, accelerate 5G training in smart facilities management, and boost the digital capability of Singapore’s construction industry.

According to the research report, “Global Smart Buildings Market Outlook, 2029” published by Bonafide Research, the market is anticipated to cross USD 165 Billion by 2029, increasing from USD 91.19 Billion in 2023. The market is expected to grow with 10.80% CAGR by 2024-29. Intelligent climate control, personalized lighting, and optimal indoor air quality create a healthier and more comfortable environment for occupants. By adapting to individual preferences and behavior patterns, smart buildings promote productivity and satisfaction. Through data-driven insights and automated control, smart buildings minimize energy waste and reduce operational costs. By optimizing resource usage and harnessing renewable energy sources, these structures contribute to sustainability goals and carbon footprint reduction. While the initial investment in smart building technology may be substantial, the long-term benefits outweigh the costs. Energy savings, reduced maintenance expenses, and increased property value result in a favorable return on investment for building owners and stakeholders. Smart buildings play a crucial role in creating resilient and sustainable cities. By reducing energy consumption, mitigating environmental impact, and promoting efficient land use, these structures contribute to a more livable and eco-friendly urban environment. Smart building systems are inherently scalable and adaptable, allowing for seamless integration with existing infrastructure and future upgrades. Whether retrofitting existing buildings or designing new constructions, the modular nature of smart technology facilitates customization and evolution over time. The surge in the adoption of smart buildings in multiple regions is driven by the growing need for better utilization of the building (and building premises) and the need for better resource management in urban environments. In addition, the growth in the need for public safety and security is fueling the growth of the smart building market. Such applications prove to be essential in the growth of smart building solutions during the period of the COVID-19 pandemic, which is expected to grow in the coming few years. For instance, smart building solutions can monitor indoor air quality (IAQ), and inform habitants and alerts building operators about the same. Higher indoor air quality is directly associated with health and well-being of building’s habitants.

Market Drivers

• Technological Advancements: Rapid advancement of technology, particularly in areas such as IoT, artificial intelligence, and data analytics drives the market. These technological innovations enable the integration of diverse systems within buildings, allowing for real-time monitoring, analysis, and optimization of various functions such as energy usage, occupant comfort, and security. As technology continues to evolve, smart building solutions become more sophisticated, cost-effective, and accessible, driving increased adoption across industries.
• Sustainability Imperatives: The growing emphasis on sustainability and environmental stewardship is another major driver for smart buildings. With rising concerns about climate change and resource depletion, there is a pressing need to reduce energy consumption, minimize carbon emissions, and promote sustainable practices in the built environment. Smart building technologies offer effective solutions to address these challenges by optimizing energy efficiency, harnessing renewable energy sources, and implementing green building principles. As governments, businesses, and consumers prioritize sustainability goals, the demand for smart building solutions is expected to escalate.

Market Challenges

• Interoperability and Integration: One of the key challenges facing the adoption of smart building technologies is the lack of interoperability and seamless integration among different systems and devices. As smart buildings incorporate numerous technologies from various vendors, ensuring compatibility and communication between disparate systems can be complex and cumbersome. Addressing this challenge requires standardized protocols, open-source platforms, and collaboration among industry stakeholders to facilitate interoperability and streamline integration efforts.
• Data Privacy and Security: The proliferation of IoT devices and interconnected systems in smart buildings raises significant concerns regarding data privacy and cybersecurity. With vast amounts of sensitive data being collected, transmitted, and stored, there is a heightened risk of data breaches, unauthorized access, and privacy violations. Securing smart building infrastructure against cyber threats requires robust encryption protocols, authentication mechanisms, and access controls to safeguard data integrity and protect against malicious attacks. Additionally, clear regulations and compliance frameworks are needed to ensure that privacy rights are respected and enforced in smart building environments.

Market Trends

• Edge Computing and AI: Edge computing, coupled with artificial intelligence (AI), is emerging as a dominant trend in smart buildings. By processing data locally at the edge of the network, rather than relying solely on centralized cloud servers, edge computing enables real-time analytics, faster response times, and reduced latency. AI algorithms deployed at the edge can analyze data streams from IoT sensors, predict system failures, and optimize building operations autonomously, leading to improved efficiency, reliability, and cost savings.
• Digital Twin Technology: Digital twin technology is gaining traction as a powerful tool for designing, simulating, and managing smart buildings throughout their lifecycle. A digital twin is a virtual replica of a physical building, synchronized in real-time with its counterpart, enabling stakeholders to visualize, monitor, and optimize building performance in a virtual environment. By creating digital twins of buildings, architects, engineers, and facility managers can conduct predictive simulations, identify potential issues, and make data-driven decisions to enhance operational efficiency and occupant experience.

The solution segment is leading the smart building market which includes building infrastructure management, security & emergency management, and energy management. Energy management is expected to grow rapidly due to increasing green building initiatives and stringent government regulations on energy consumption.

The solution segment is estimated to have gained the largest market share in 2022, while services segment is likely to grow at the fastest rate during the forecast period. Smart building solutions use IoT technology, which enable efficient and economical use of resources, such as IoT sensors, analytics software, a user interface, and a means of connectivity. This helps create a safe and comfortable environment for end users. In addition, it uses a range of technology, such as sensors and actuators, to gather activity data on various aspects within the building, which helps analyze and utilize operation more efficiently. For instance, Shanghai’s New Development Bank (NDB) implemented intelligent building solutions to monitor indoor lighting, electric curtains, and windows and witnessed more than 15% energy savings. The security & emergency management solution is expected to gain maximum share. There is increasing demand for security systems, surveillance systems, advanced building operation services, and smart workplace solutions in commercial buildings. Solutions are emerging as the dominant force in the smart buildings market because they offer a comprehensive approach to addressing the diverse needs of building stakeholders. Unlike individual products or technologies, which may focus on specific aspects such as energy management or security, solutions integrate various components and functionalities to deliver overarching benefits. By combining hardware, software, connectivity, and services into cohesive offerings, solutions provide end-to-end capabilities that optimize building performance, enhance occupant experience, and drive operational efficiency. For example, a smart building solution may incorporate sensors for monitoring environmental conditions, a centralized management platform for data analytics and control, and predictive maintenance services to proactively address equipment failures. This holistic approach enables building owners, operators, and occupants to tackle multiple challenges simultaneously, ranging from energy conservation and cost reduction to comfort optimization and sustainability. Moreover, solutions often offer scalability, interoperability, and customization features that align with the evolving needs and preferences of different stakeholders.

Safety and security management are leading in the Smart Buildings Market due to the multifaceted challenges posed by an increasingly interconnected and dynamic built environment, where the protection of occupants and assets is paramount.

In today's rapidly evolving urban landscape, characterized by intricate networks of buildings, infrastructure, and technology, ensuring the safety and security of occupants and assets has become an imperative for building owners, operators, and occupants alike. The rise of smart buildings has introduced a plethora of opportunities to address these challenges, offering integrated solutions that leverage cutting-edge technologies to detect, deter, and respond to a wide array of threats in real-time. One of the key drivers behind the leadership of safety and security management in the smart buildings market is the multifaceted nature of the risks facing modern built environments. Physical intrusions, unauthorized access, vandalism, natural disasters, and cyber threats are just a few examples of the diverse array of hazards that buildings must contend with on a daily basis. Smart building technologies provide a holistic approach to managing these risks, integrating a range of sensors, surveillance cameras, access control systems, and data analytics tools to create a comprehensive security ecosystem. For instance, advanced video analytics can detect anomalous behavior or unauthorized access attempts, while biometric authentication systems bolster access control measures and identity verification protocols. Moreover, IoT sensors continuously monitor environmental conditions such as air quality, temperature, and humidity, enabling early detection of fire, gas leaks, or other potential hazards. By aggregating and analyzing data from these disparate sources, smart building platforms empower building operators to proactively monitor for threats, respond swiftly to incidents, and coordinate emergency procedures effectively. Furthermore, the convergence of physical security with cybersecurity is a critical aspect of modern safety and security management in smart buildings. As buildings become increasingly interconnected through IoT devices and networked systems, they also become vulnerable to cyber threats such as malware, ransomware, and phishing attacks targeting building automation systems and connected devices. As a result, smart building solutions must incorporate robust cybersecurity measures, including encryption, authentication, and intrusion detection systems, to safeguard against digital threats and ensure the integrity and confidentiality of sensitive data.

Implementation services are leading in the Smart Buildings Market due to the complex integration and customization requirements of smart building solutions, necessitating expert guidance and support throughout the deployment process.

Implementation services have emerged as a dominant force in the Smart Buildings Market due to the intricate nature of deploying and integrating smart building solutions within diverse built environments. Unlike off-the-shelf products that can be readily deployed, smart building solutions often require extensive customization, integration, and optimization to meet the unique needs and specifications of each building. This complexity stems from the diverse array of technologies involved, including sensors, IoT devices, automation systems, software platforms, and connectivity infrastructure, which must be seamlessly integrated to deliver the desired outcomes. Additionally, smart building deployments may involve retrofitting existing buildings with new technologies, coordinating with multiple stakeholders, and navigating regulatory requirements and industry standards. Implementation services play a critical role in guiding building owners, operators, and developers through every stage of the deployment process, from initial planning and design to installation, configuration, and commissioning. These services encompass a wide range of activities, including site assessments, system design, project management, procurement, testing, training, and ongoing support. By leveraging their expertise and experience, implementation service providers help ensure the successful deployment and operation of smart building solutions, mitigating risks, optimizing performance, and maximizing return on investment for their clients. Moreover, implementation services facilitate knowledge transfer and capacity building within organizations, empowering stakeholders to effectively manage and maintain smart building systems over the long term. As the complexity and scale of smart building deployments continue to grow, the demand for expert implementation services is expected to increase, driving the leadership of implementation services in the Smart Buildings Market.

The commercial segment is expected to dominate the market, owing to increasing focus by stakeholders such as developers and owners of Commercial Real Estate (CRE) on the intelligent building to reduce operational costs.

Commercial applications are leading in the Smart Buildings Market due to the significant cost savings, efficiency improvements, and productivity gains that smart building solutions offer to businesses and organizations. Commercial applications have emerged as the frontrunners in the Smart Buildings Market owing to the compelling value proposition that smart building solutions present to businesses, corporations, and organizations of all sizes. Unlike residential or institutional buildings, commercial buildings typically house a myriad of functions, including offices, retail spaces, restaurants, hotels, and entertainment venues, each with unique operational requirements and demands. Smart building technologies offer tailored solutions that address these diverse needs, delivering tangible benefits in terms of cost savings, efficiency improvements, and productivity gains. One of the primary drivers behind the leadership of commercial applications in the smart buildings market is the potential for significant cost savings. Energy represents a substantial operational expense for commercial buildings, accounting for a significant portion of their operating budgets. Smart building solutions enable businesses to optimize energy usage, reduce wastage, and lower utility bills through features such as automated lighting control, occupancy-based HVAC scheduling, and real-time energy monitoring and analytics. By identifying inefficiencies and implementing energy-saving measures, commercial building owners and operators can achieve substantial cost savings over time, enhancing their bottom line and profitability. Moreover, smart building technologies offer opportunities for operational efficiency improvements that translate into tangible business benefits. By integrating various building systems such as HVAC, lighting, security, and access control into centralized management platforms, smart buildings enable streamlined operations, proactive maintenance, and optimized resource allocation. For example, predictive maintenance algorithms can identify equipment failures before they occur, minimizing downtime and disruptions to business operations. Additionally, smart building solutions can enhance occupant comfort and satisfaction, contributing to higher employee morale, productivity, and retention rates. In commercial settings such as retail stores and hospitality venues, smart building technologies can also enhance the customer experience through personalized services, targeted marketing, and interactive features. As businesses increasingly recognize the value of smart building investments in driving cost savings, efficiency improvements, and customer satisfaction, the demand for commercial applications in the smart buildings market is expected to continue to grow.

North America is expected to dominate the regional revenue share during the forecast period as prominent companies across regional industries are shifting toward intelligent building solutions to boost workplace operations.

North America has emerged as the frontrunner in the Smart Buildings Market, driven by a combination of factors that have propelled the region to the forefront of smart building adoption and innovation. One of the primary reasons behind North America's leadership in the smart buildings market is its robust infrastructure, characterized by modern building stock, advanced telecommunications networks, and widespread access to high-speed internet connectivity. This infrastructure provides a solid foundation for the deployment and integration of smart building technologies, enabling seamless connectivity and interoperability among diverse systems and devices. Moreover, North America boasts a highly developed ecosystem of technology providers, solution integrators, and service providers specializing in smart building solutions. The region is home to numerous leading companies and startups at the forefront of innovation in areas such as IoT, artificial intelligence, data analytics, and cloud computing, driving the development and adoption of cutting-edge smart building technologies. Additionally, North America benefits from a supportive regulatory environment that encourages investment in smart building initiatives and fosters collaboration among industry stakeholders. Government initiatives, incentives, and regulations aimed at promoting energy efficiency, sustainability, and building automation have incentivized building owners, developers, and operators to invest in smart building solutions. For example, programs such as Energy Star and LEED certification provide recognition and incentives for buildings that meet certain energy performance and sustainability criteria, driving demand for smart building technologies that enable compliance with these standards. Furthermore, initiatives at the state and municipal levels, such as building codes and ordinances requiring the implementation of energy-efficient and smart technologies, have contributed to the widespread adoption of smart building solutions across North America.

The key players in the market are strategically entering into partnerships and collaborations to expand their market share. These players also partner with different rating and assessment certification providers to ensure the safety and quality of smart solutions. The players are acquiring local players across countries to expand their global presence. Also, the market players are continuously investing in developing and launching new intelligent solutions and services for managing commercial and residential building operations. Market players are observed to invest resources in research & development activities to support growth and enhance their internal business operations. The report will include company analysis based on their financial performances, product benchmarking, key business strategies, and recent strategic alliances. Companies can be seen engaging in mergers & acquisitions and partnerships to further upgrade their products and gain a competitive advantage in the market. They are effectively working on new product development, and enhancement of existing products to acquire new customers and capture more market shares. For instance, in September 2022, announced a partnership with Caverion. The main aim of the partnership is to hasten the creation of sustainable and energy-efficient buildings. The partnership aims to jointly provide customers with cutting-edge, clever solutions for creating carbon-neutral buildings and meeting their sustainability goals.

Recent Developments

• In July 2023, Siemens partnered with PRODEA Investments, one of the real estate investment companies in Greece, to implement Building X. Building X is a Siemens digital building platform.
• In April 2023, Obayashi Corporation and Hitachi Solutions Ltd incorporated Oprizon Ltd, a joint venture for providing smart building-related services, based on the Joint Venture Agreement executed in January 2023, to become the leading smart building service provider and started operation in April 2023.
• In March 2023, Siemens Smart Infrastructure introduced Connect Box, an open and easy-to-use IoT solution for small- to medium-sized buildings. The addition to the Siemens Xcelerator portfolio, Connect Box, is mainly a user-friendly approach for monitoring building performance, with the potential to optimize energy efficiency by up to around 30% and to substantially improve the overall indoor air quality in small to medium-sized buildings such as schools, retail shops, apartments, or small offices.
• In May 2023, Delta, announced a smart community hub enabled by its broader portfolio of IoT-based Smart Green Solutions. The ""Intelligent Sustainable Connecting Hub"" features an intelligent Operation Center with a multi-functional management platform for companies to manage critical operations, including carbon emissions inventory and renewable power matching. Moreover, the new VORTEX, cloud-based video surveillance as a service (VSaaS), the smart microgrid-supported EV charging infrastructure, and the energy-efficient data center solution demonstrate how Delta's solutions integrate seamlessly to ensure the sustainable development of many sectors.

Considered in this report
• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in this report
• Smart Building market Outlook with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Component
• Solutions
• Services

By Solution
• Safety and security management
• Energy management
• Building infrastructure management
• Network management
• Integrated Workplace Management System (IWMS)

By Services
• Implementation
• Consulting
• Support and maintenance

By Application
• Commercial
• Residential
• Industrial

The approach of the report:
This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience
This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Smart Building industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.
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