Government regulations & green building initiatives and IOT-enabled smart automation in buildings are driving the growth of the Smart Buildings Market at a CAGR of 16.1% during the forecast period 2025 to 2035

Market Research Future (MRFR) has published a cooked research report on the “Global Smart Buildings Market” that contains the information from 2019 to 2035.

The Global Smart Buildings Market is estimated to register a CAGR of 16.1 % during the forecast period of 2025 to 2035.

MRFR recognizes the following companies as the key players in the Global Smart Buildings Market — Itron, Inc., Panasonic Holdings Corporation, Johnson Controls, HCL Technologies Ltd., Cisco Systems, Inc., ABB Group, Siemens, Hitachi, Ltd., Honeywell, IBM and others.

The Global Smart Buildings Market accounted for registering a CAGR of 16.1 % during the forecast period and is estimated to reach USD 427.33 billion by 2035.

Various building energy-related technologies have been introduced and developed to support these global challenges of reducing building energy consumption and GHG emissions .According to International Energy Agency the operations of buildings account for 30% of global final energy consumption and 26% of global energy-related emissions (8% being direct emissions in buildings and 18% indirect emissions from the production of electricity and heat used in buildings) in the year 2022.The United Nations Environment Program (UNEP) estimates that the energy intensity of the global building sector needs to improve on average by 30% by 2030 to meet global climate goals. 

While advanced building energy codes can reduce building energy consumption by up to 70%, the adoption of these codes and standards has been growing and are uneven globally. Currently, only 88 countries (including the world’s 25 largest economies) have adopted and made mandatory a building energy code or building energy efficiency standards in at least one city. The rate of urbanization also affects the need of energy efficiency and is growing rapidly – 55% of the world's population lives in urban areas nowadays, and the proportion is set to increase to 68% by 2050.

Governments all over the world are legislating to reduce energy consumption and CO2 emissions from buildings, and professional organizations are also establishing the relevant certification programs. In the European Union, new regulations demand that all new buildings should have an energy consumption level close to zero. The Energy Performance of Buildings Directive (2018/844/EU) aims to decarbonize national building stocks by 2050.

Hence with all the government regulations and environmental targets, smart buildings are an effective and efficient solution in today’s scenario as smart buildings significantly improve energy efficiency by using sensors and interconnected systems to optimize operations like HVAC, lighting, and resource management, leading to reduced energy consumption and costs. Smart buildings integrate IoT sensors to monitor occupancy and adjust HVAC and lighting in real time, reducing energy waste. Energy Management Systems (EMS) provide real-time insights, enabling predictive maintenance and efficient energy distribution. Additionally, demand response integration helps shift power consumption to off-peak hours, reducing strain on the grid and lowering costs.

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Segmental Analysis

The Global Smart Buildings Market has been segmented based on Solution Type, by Technology, by Application, by Building Type, by Functionality.

Based on Solution Type, this segment includes Building Automation Systems (BAS) (HVAC Control Systems, Lighting Control Systems, Smart Elevator and Escalator Systems), Energy Management Systems (Smart Meters and Energy Monitoring, Renewable Energy Integration (Solar Panels, Wind Turbines), Demand Response Systems), Security and Access Control Systems (Smart Surveillance Cameras, Biometric and RFID Access Control, Intrusion Detection Systems), IoT-Enabled Infrastructure (Occupancy and Motion Sensors, Connected Appliances and Devices, Smart Thermostats), Communication Systems (Unified Communication Platforms, Smart Intercom Systems). The Energy Management Systems segment dominated the global market in 2024, while it is projected to be the fastest–growing segment during the forecast period. 

An energy management system (EMS) is a set of tools combining software and hardware that optimally distributes energy flows between connected distributed energy resources (DERs). Companies use energy management systems to optimize the generation, storage and/or consumption of electricity to lower both costs and emissions and stabilize the power grid. EMS collects, analyzes and visualizes data in real time and dynamically controls energy flows. An energy management system is the building block of future energy use cases as it intelligently monitors and controls a variety of energy assets within a household, building or larger site.

Based on Technology, this segment includes Artificial Intelligence (AI) for Predictive Maintenance, Internet of Things (IoT) for Device Connectivity, Cloud Computing for Remote Monitoring and Management, Blockchain for Secure Data Sharing, Augmented Reality (AR) and Virtual Reality (VR), Others. The Internet of Things (IoT) for Device Connectivity segment dominated the global market in 2024, while the Artificial Intelligence (AI) for Predictive Maintenance segment is projected to be the fastest–growing segment during the forecast period. Internet of Things (IoT) for device connectivity in smart buildings refers to the use of interconnected devices and sensors that communicate with each other via the internet or local networks to automate, monitor, and optimize building operations. IoT enables seamless connectivity between various building systems such as lighting, HVAC, security, and energy management through smart devices like sensors, smart meters, and controllers. These devices collect and transmit data in real-time to centralized platforms, allowing building managers to monitor energy usage, adjust environmental settings, track occupancy, and even predict maintenance needs.

Based on Application, this segment includes Energy Optimization and Management, Space Management, Safety and Security Enhancement, Predictive Maintenance and Analytics, Environmental Monitoring, Others. The Energy Optimization and Management segment dominated the global market in 2024, while it is projected to be the fastest–growing segment during the forecast period. In smart buildings, energy optimization and management leverage technology to reduce energy consumption and costs through real-time monitoring, automated control, and data analytics, ultimately leading to more efficient and sustainable buildings. Energy optimization and management in smart buildings involve the use of advanced technologies and IoT devices to monitor, control, and reduce energy consumption across the building. Through the integration of smart meters, sensors, and automated systems, smart buildings continuously gather real-time data on energy usage from various systems, including lighting, heating, ventilation, and air conditioning (HVAC), appliances, and more. This data is then analyzed to identify inefficiencies, peak consumption times, and opportunities for energy savings.

Based on Building Type, this segment includes Residential Buildings (Apartments and Smart Homes, Multi-Family Housing), Commercial Buildings (Office Spaces, Retail Stores and Shopping Centers, Hospitality (Hotels, Resorts)), Industrial Buildings (Manufacturing Facilities, Warehouses and Distribution Centers), Institutional Buildings (Healthcare Facilities (Hospitals, Clinics), Educational Institutions (Schools, Universities), Government and Public Buildings). The Commercial Buildings segment dominated the global market in 2024, while it is projected to be the fastest–growing segment during the forecast period. 

Commercial buildings in smart buildings are office spaces, retail centers, or other business facilities that utilize advanced technologies, IoT devices, and automation to optimize operations, enhance productivity, and improve occupant comfort. These buildings integrate systems such as lighting, heating, ventilation, air conditioning (HVAC), security, and energy management to create an intelligent, efficient environment. Smart lighting systems automatically adjust based on occupancy or natural light levels, while HVAC systems optimize energy usage by adjusting temperatures according to building occupancy or weather conditions. Smart security features, including surveillance cameras, smart access control, and motion sensors, enhance safety and streamline access management. Additionally, energy management systems track energy consumption and identify inefficiencies, helping businesses reduce operational costs and carbon footprint.

Based on Functionality Type, this segment includes Energy Management Solution (Smart Meters, Battery Storage System, Others), Building Automation Solution (Smart Thermostats, Occupancy and Daylight Sensors, Automated Irrigation System, Water Flow Sensors and Leak Detector Sensors, Others), Security and Access Control Solutions (Biometric Scanner, RFID Enabled Door Lock, Smart Intercom, Smoke Detectors and Fire Alarms, Others), IoT and Connectivity Solutions (IoT Hubs and Gateways, Mesh Networks, Others), Space and Occupancy Management (Sewer Inspection Camera, Others), Comfort and Wellness Solutions (Air Quality Sensors, Smart Air Purifiers and Humidifiers, Others), Data Analytics and Management Solutions (Temperature and Humidity Sensors, Viberation Meters, Pressure Sensors, Others), Smart Power Utilities and Solution (EV Charging with IoT integration, Others), Infrastructure Management Solution (IoT Enabled Elevator, Others). 

The Energy Management Solution segment dominated the global market in 2024, while it is projected to be the fastest–growing segment during the forecast period. In smart buildings, energy management solutions, often called Building Energy Management Systems (BEMS). An intelligent building energy management system is called a BEMS and is responsible for regulating service systems (for example, heating, boilers and pumps, thermal regulation to achieve the optimum room temperature needed, regulation of lights or other devices that consume energy, and logging data from energy meters). It can, for example, regulate the air conditioning in buildings with the cooling system distributing cold air throughout the building using devices like fans. The variety of intelligent networking and advanced control functions is obviously made possible by advances in hardware and software, as well as by the reliability of the electronics used and the network protocols, sensors, the transition to wireless and the massive diffusion of the internet of things through sensors for the interconnection of objects and systems.

Regional Analysis

Geographically, the Global Smart Buildings Market has been segmented into North America, Europe, Asia-Pacific, South America, Middle East & Africa.

Major demand factors driving the North America market are the increased demand for energy efficiency & sustainability and government regulations & green building initiatives and IOT-enabled smart automation in buildings. A smart building in North America is one that utilizes advanced technologies such as Internet of Things (IoT) devices, sensors, and automated systems to improve energy efficiency, enhance occupant comfort, and reduce operational costs. These buildings are designed to optimize performance and sustainability by monitoring and adjusting lighting, heating, ventilation, and air conditioning (HVAC), as well as security and safety systems.

The smart building market in Europe has been growing rapidly due to the increasing demand for energy efficiency, sustainability, and improved building management. This market is driven by advancements in technologies such as IoT, AI, and cloud computing, which allow buildings to become more automated, energy-efficient, and responsive to the needs of occupants. The push for greener, more sustainable infrastructure is also a key factor, with governments and organizations pushing for stricter energy regulations and sustainability goals.

The smart building market in the Asia Pacific region is experiencing significant growth, driven by urbanization, a rising demand for energy efficiency, and a strong emphasis on sustainability. This region is rapidly adopting smart technologies such as IoT, AI, and cloud computing to optimize building operations, enhance occupant comfort, and reduce environmental impact. Governments and developers are increasingly prioritizing smart, green buildings due to regulatory pressures and the need for sustainable urban infrastructure.

The smart building market in South America is still emerging but is steadily gaining momentum as urbanization, energy efficiency, and sustainability become critical priorities. Increasing demand for advanced technologies like IoT, AI, and automation in buildings is helping the region move towards smarter, more sustainable infrastructure. Governments and private developers are beginning to recognize the potential of smart buildings to improve energy management, reduce operating costs, and enhance occupant comfort. The building uses a Building Management System (BMS) that leverages real-time data from sensors to optimize energy consumption across lighting, HVAC, and other systems. This system automatically adjusts based on occupancy, weather conditions, and other environmental factors, ensuring a comfortable environment for tenants while minimizing energy waste.

The smart building market in the Middle East and Africa (MEA) is rapidly expanding, driven by increasing urbanization, a focus on sustainability, and a desire to improve energy efficiency. The region is home to some of the world's most ambitious architectural and technological projects, where smart buildings are being integrated with advanced IoT, AI, and automation systems to enhance performance, sustainability, and occupant comfort. Governments are also placing greater emphasis on green building certifications and reducing carbon footprints, which is further accelerating the adoption of smart technologies.

Key Findings of the Study

• The Global Smart Buildings Market is expected to reach USD 427.33 billion by 2035, at a CAGR of 16.1% during the forecast period.


• The North America region accounted for the fastest-growing global market.


• Based on the Application, the Energy Optimization and Management segment was attributed to holding the largest market in 2024.


• Itron, Inc., Panasonic Holdings Corporation, Johnson Controls, HCL Technologies Ltd., Cisco Systems, Inc., ABB Group, Siemens, Hitachi, Ltd., Honeywell, IBM are some of the players in the market.