Global smart building technology spending to reach $21.9 billion in 2018 from $7.3 billion in 2014 and $6.3 billion in 2013, said IDC.
Smart building technology
Though the smart building technology spending will grow substantially, representing a 28.4 percent compound annual growth rate (CAGR), adoption rates are expected to vary by region, with the most aggressive adoption in North America, Western Europe and Asia/Pacific over the next five years, said IDC.
Smart building applications
IHS earlier estimated that annual expenditures of integrated smart building applications, as measured by equipment supplier revenues, will grow globally by 150 percent by 2017.
The global market for integrated equipment in buildings is forecast to grow at an average annual rate of 20.3 percent—from $12.6 billion in 2012 to $31.6 billion by 2017. As a proportion of overall building equipment investment, smart applications are forecast to increase from 8 percent to 14 percent over the same period.
“One of the key drivers for integrating systems and making buildings more intelligent is the energy efficiency savings that can be achieved,” said William Rhodes, senior market analyst, building technology, IHS. “While energy efficiency measures represent only one aspect of intelligent building design, their effectiveness is easily quantified and building owners can immediately see the return on their investment.”
According to IHS, Asia is forecast to have the highest growth rate in supplier revenues on integrated building applications, increasing from $4 billion in 2012 to $15.7 billion in 2017. The North American market will see the second-fastest growth rate, with revenues increasing from $4.7 billion to $8.9 billion.
IDC said different countries face very different drivers towards the expansion of smart buildings, including owners and managers seeking to reduce and control energy costs (U.S.) to governments driving environmental and energy efficiency objectives (Germany) to meeting energy supply challenges (Japan).
IDC says the smart buildings technology market is expected to grow rapidly as there is increasingly broad market awareness of the business values generated by deploying smart building solutions. Smart building technologies have matured to enable facility optimization through the convergence of information technology and building automation.
Building owners and key decision makers are increasingly aware of the business value of these solutions; however, adoption of these technologies has been slow due to changes in business processes required for deployment and utilization.
IDC said a number of recent case studies and demonstrations are helping educate the end-user market around the business case and benefits associated with developing smart buildings.
Prior to 2013, the global smart building market grew more slowly than expected due to externalities such as less expensive electricity in several markets and a slow economic recovery leading to deferred capital investments.
In 2014 and over the next several years, adoption is expected to recover as the economic recovery takes hold and as energy costs remain a large and variable component of building operation.
Despite the aggressive growth forecast for the smart buildings market, adoption still represents a small share of the total addressable market. The continued development of case studies and best practices by early adopters will promote awareness and support longer-term expectations for market expansion.
With many basic control and monitoring systems in place, a need is developing for intelligent software and external services to help analyze, interpret, and prioritize the data that is being collected.
Smart buildings technology trends
IDC report mapped several industry trends.
First, vertical industry has a large impact on the rate of adoption of smart building technologies. Buildings managed in the government or healthcare verticals, for example, tend to be more mature in their appreciation of the benefits of smart buildings, and more advanced in their deployment.
Secondly, investments over the past several years have focused on HVAC systems. Customers are now beginning to expand their evaluation to lighting, plug load, equipment maintenance, and other issues.
Solution adoption may vary by region, business segment, and solution type, but it is evident that demand is growing at the global scale. As business owners see firsthand, the business benefits associated with deploying the enabling technology within the smart building ecosystem, there will be strong expectations for these solutions in the years to come.