The global smart building market is estimated to reach $201.2 billion by 2031, according to a new report published by Allied Market Research (AMR).

The smart building market was valued at $69.8 billion in 2021, and is growing at a compound annual growth rate (CAGR) of 11.3% from 2022 to 2031, the Portland, Ore.-based market research firm estimates. 

Smart buildings are characterized by the use of integrated systems that communicate critical information and utilize that data to improve the efficiency of the buildings. These integrations can help manage almost every aspect of building management using IoT sensors and building automation, including HVAC, lighting, shading and security, such as access control, as well as user-centric tasks like navigation and conference room scheduling. 

Based on solution type, the security and emergency management (SEM) segment contributed to around one-quarter of the total market revenue in 2021. The energy management segment is forecast to grow at the fastest CAGR of 13.5% by 2031.

Earlier this year, Juniper Research released a report estimating more than 115 million buildings will deploy smart technologies by 2026, up from 45 million this year. That report also forecasts 90% of smart buildings will be non-residential in 2026.

The commercial segment dominated the smart building market share in 2021, and is expected to continue this trend during the AMR’s forecast period, owing to the rising need for efficient energy and resources management solutions in commercial buildings. The multi-dwelling housing segment is expected to witness the highest growth in the upcoming years, as rising standard of living and urbanization trends are fueling the demand for smart buildings. 

Moreover, the smart infrastructure initiatives are being supported by government and local authorities, which is further empowering the growth of the segment and the smart building market forecast in the coming few years.

In 2021, the United States Department of Energy launched a $61 million program to increase smart building implementation and estimates that grid-interactive efficient buildings can cut up to $18 billion in annual power system costs and reduce carbon emissions by 80 million tons.

Despite the rosy forecasting, the smart building market is not without its challenges. Cybersecurity concerns associated with these facilities and higher investment requirements noted headwinds in the AMR report. Also, the market continues to rebound from COVID-19 shutdowns, during which the production of some materials were partially or completely stopped, while slower new construction depressed demand.

Conversely, due to the uptake in work from home policies, many businesses were prompted to adopt intelligent building solutions that enabled efficient monitoring and maintenance systems for the upkeep and functioning of key facilities. Such factors provided new opportunities for the development and growth of the global intelligent building market, says AMR. 

Region wise, the market was dominated by North America in 2021 and is expected to retain its position during the forecast period, according to AMR. This is due to the presence of a highly developed information and communication technology (ICT) sector and high spending, aiding the growth of the smart building industry.