The building automation market is an expanding global opportunity, with growth underpinned by the decreasing cost of hardware and networking technologies, increased construction activity, and initiatives taken by governments to promote sustainable smart buildings and smart city initiatives, amongst others. As building automation systems have become more affordable, now even small and mid-sized apartment owners are using automation to control their properties. Previously, these systems were not usually deployed in sparsely occupied buildings such as warehouses and garages, but with increased affordability, these systems have applications in such non-traffic areas as well.
This report summarises the status and forecasts from the Building Automation Application Group found in the Transforma Insights Connected Things IoT forecast. The report provides a description of what is covered in the Application Group, as well as top-level figures from the forecast that provide detail on how many connected devices will be installed, the types of communication technology used and the total revenue opportunity.
A full set of forecast data, including country-level forecasts, sector breakdowns and public/private network splits, is available through the IoT Forecast tool.
The “Market development” section begins with a list of the drivers that are expanding the building automation market, such as various government initiatives and increased construction activities.
It then discusses how the evolution of IoT technologies has made building automation systems more powerful, less expensive, and more accessible than before. Apart from financial advantages, the indirect benefits of deploying building automation systems (such as better lease rates, valuation, and sales price) have been discussed here as well. For instance, an EU Commission report claimed that smart buildings have 12% better lease rates than non-smart ones and their sales price and valuation can also be 3% to 25% higher.
It also mentions the connectivity technologies used in these, including Wi-Fi, mesh technologies (ZigBee and Z-Wave), Bluetooth, Ethernet, and powerline communication, and their advantages over one another.
It then expounds on how smart cities (mostly government-led ones) are accelerating the adoption of building automation systems, especially in countries like China, South Korea, India, and Japan. The discussion in this section also includes new mergers, partnerships, and innovations that are enhancing the capabilities of building automation systems (which have edge processing capabilities and use advanced network technologies). To cite an instance, in 2021, IOTech Systems teamed up with Building System Integrators to provide advanced equipment connectivity, edge processing, and edge management capabilities for enterprises that have mission-critical requirements.
The Building Automation category comprises three areas: Building Automation Systems, Air Quality Monitoring, and Water Flow Detectors.
This section first lists the main drivers of the building automation market, specifically the installation of Building Automation Systems (BAS), such as smart city initiatives and reducing price of hardware and connectivity.
It then explains how the evolution of IoT technologies has positively impacted building automation systems. For instance, wireless technologies have reduced installation costs and made the installation process a lot easier; a wireless BAS can be installed in 20% less time, compared to a similar wired BAS and can reduce the cost of deployment by up to 30%. It also points out the expanding applications of BAS these days (due to advancement in technology), which include people proximity sensing and white goods control; and further charts the communication technologies that are used to connect BAS (like Bluetooth and Ethernet).
It then asserts that the growing number of government-led smart city initiatives in countries like China, South Korea, India, and Japan, have caused further acceleration of Building Automation adoption. It also explains how new mergers, partnerships, and innovations are enhancing the capabilities of Building Automation Systems, which includes systems with edge processing capabilities, using advanced network technology and better IT and OT integration.
The Building Automation Application Group comprises three areas: Building Automation Systems, Indoor Air Quality Monitoring, and Water Flow Detectors.
This section has been further categorised into four subsections: Regulations are accelerating adoption; Overcoming the interoperability challenge in Building Automation Systems; BAS differs in commercial buildings; and Cybersecurity risks act as a barrier to the adoption of Building Automation Systems.
It first argues that since buildings account for a large share of energy consumption, increasing energy efficiency in buildings is becoming a priority for many governments, prompting them to come up with firm energy-efficiency policies to check energy consumption in buildings. For example, the EU aims for net-zero buildings by 2030, and more than 50% of S&P 500 companies have committed to CO2 emissions targets. It also adds that Building Automation Systems (BAS) are therefore being integrated into buildings and lists the benefits of doing so (like 15-30% cost savings, enabled by lesser electricity consumption and operation and maintenance costs).
It outlines EU initiatives like the Smart Readiness Indicator (SRI) to rate building intelligence and promote smart technologies, alongside other countries developing standards for smart homes and building efficiency. It further adds that while not mandatory, such certifications often raise property value and rents - for example, LEED-certified US offices command ~7.1% higher rents.
This subsection explains that in recent times, there have been attempts to integrate as many systems as possible into BAS to reduce hardware requirements, which has created compatibility challenges. Therefore, this market is increasingly engaging in solving the issue of the lack of interoperability between different systems and devices.
It adds that most Building Automation Systems are therefore now shifting to open communication protocols to reduce integration costs and improve interoperability across vendors, supported by emerging certifications and standards in some countries (including Germany, whose “Smart Home + Building Certification Programme” promotes interoperability and IT security.
This subsection centres around the difference in BAS (Building Automation System) requirements across building types, based on factors like operational patterns, occupancy levels, safety requirements, and energy needs. To cite an instance, since airports handle millions of passengers daily and operate 24/7, they require highly reliable, large-scale automation for continuous operations.
This subsection focuses on some factors which may negatively impact the market adoption, including cyber-attack risks. For instance, in 2023, smart buildings operator Johnsons Controls’ network was infiltrated by the Dark Angels ransomware group, leading to data theft and operational disruption with estimated losses of around USD27 million. It also lists a few examples of relevant IoT deployments in this application, including Divine Utility Mall adopting a smart building solution from 75F.
This section begins with an explanation of the increasing air pollution levels and environmental concerns being the main drivers behind the growth of the air quality monitoring system market, resulting in various governments setting air quality standards and taking measures to monitor indoor air quality. For instance, the Energy Performance of Buildings Directive (EPBD) requires all medium to large non-residential buildings, public buildings, schools, and hospitals in the EU to continuously monitor, report, and evaluate indoor environment quality (IEQ) that includes parameters such as PM1, PM2.5, and CO2.
It then focuses on countries with high outdoor pollution levels, which necessitate monitoring pollution levels and claims that North American and East Asian countries (including China, Japan, and South Korea) are at the forefront in the adoption of air quality monitoring systems. It adds that the above-mentioned three Asian countries have created a working group, ‘WGII: Technology/Policy on Air Quality Monitoring and Prediction’ - to promote and reinforce monitoring systems to gather the data necessary to implement air quality measures. It then talks about the communication technology that is suitable in this context and lists some of the barriers (like the lack of mandatory requirements by governments) which may hamper their adoption, especially in developing countries. It also provides some examples of relevant IoT deployments in this application, like University College Isle of Man (UCM) deploying Libelium air quality monitors at the college.
This section of the report discusses the drivers behind the increasing adoption of water flow detectors (like the increasing demand for smart sensors to measure water consumption and reduce water leakage). It then discusses how insurance companies are increasingly deploying leak detection devices to reduce risks in several countries. Case in point, Mercury Insurance in the US offers smart home water monitoring devices called Flume 2 at a subsidised price of USD99 instead of a higher retail price of USD149, and an additional USD25 post-installation rebate. It then lists some of the benefits of deploying such monitors, like monitoring excess water flow, reducing wastage, and preventing the growth of bacteria like legionella in water.
It also talks about the increasing product offerings (like Resideo’s Wi-Fi-enabled and battery-powered water leak and freeze detector sending notifications on detecting a frozen pipe or a leak) and the heightened rate of innovation in network technology in the context of the arrival of cellular LPWA technologies. It also lists some of the potential barriers which may limit their adoption in future (like smaller houses and buildings that don’t require the detection of the precise location of a leak, may deem installation of separate leak detectors irrelevant).
This section also provides some examples of relevant IoT deployments in this application like Tidhar Construction deploying water sensors from WINT on water mains at more than 40 projects.
The key vendors section lists some of the main providers of products and services related to the market, such as ABB, ADT, Aeroqual, Emerson Electric, Honeywell, Johnson Controls, Samsung SmartThings, Schneider Electric, Siemens, and Vivint. The report provides profiles of the various vendors, including aspects most relevant to this Application Group, such as product offerings, pricing, financial results, and technology.
In the market forecasts section, we provide a summary of the forecasts from the Transforma Insights IoT Forecast Database:
The report charts the growth in the number of building automation devices, which will grow from 1.3 billion in 2025 to 3.1 billion in 2035.
Transforma Insights forecasts are compiled on a country-by-country basis. This report includes a regional summary, showing splits between Australasia, Greater China, North America, Europe, Japan, Latin America, MENA, Russia & Central Asia, South East Asia, South Korea, India & South Asia, and Sub-Saharan Africa.
Transforma Insights’ IoT forecasts include splits between the various connectivity technologies as follows: 2G, 3G, 4G, 5G mMTC, 5G non-mMTC, LPWA (non-mMTC), Satellite, Short Range, and Other.
This section discusses which technologies will be used in the building automation application group.
This part of the report discusses the market growth in terms of revenue (module revenue, service wrap revenue, and VAC revenue). Transforma Insights estimates that the revenue in the Building Automation Application Group will grow at a CAGR of 9%.
