Growth Opportunities of Artificial Intelligence in the Built Environment Customer Insights and Business Models

Revenue Forecast

The estimated revenue for the base year 2023 is $25.38 billion, with a CAGR of 21.6% for the study period 2023–2029.

The Impact of the Top 3 Strategic Imperatives on the Homes and Buildings Industry

Innovative Business Models

Why:

• Businesses worldwide are experiencing a slowdown in growth, necessitating the adoption of innovative business models to accelerate the penetration of products and solutions to offset the effects of the uncertain economic climate.
• Both B2B customers and direct consumers are facing challenges due to rising interest rates and inflationary pressures.

Frost Perspective:

• Building technology, construction management, PropTech, and smart home device vendors are striving to maximize their revenue from software and services by leveraging outcome-linked and subscription service business models including the software-as-a-service model, reducing the financial burden on customers in a tough economic environment.

Disruptive Technologies

Why:

• The built environment is increasingly embracing digital solutions driven by AI, machine learning, the internet of things (IoT), cloud, and accelerated computing technologies.
• Vendors offering software solutions and connected products have observed double-digit growth in the last few years.

Frost Perspective:

• The markets for AI and IoT-driven building energy management, BIM-enabled digital twin, AI-driven customer experience platforms, IoT-driven building automation, and data-driven facility management are rapidly expanding. These technologies are capable of tackling energy efficiency and carbon emission challenges in the built environment.

Transformative Megatrends

Why:

• Megatrends in the homes and buildings industry are essential for achieving a sustainable and net-zero built environment. Industry participants must embrace relevant megatrends to implement strategic initiatives addressing pressing challenges related to climate change mitigation, resource optimization, and carbon emission reduction.

Frost Perspective:

• Some of the leading and emerging participants have realigned their portfolios recently to accelerate growth by leveraging megatrends including urbanization, digitalization, decarbonization, electrification, energy transition, and demographic change.

Application Segmentation

AI Applications and Use Cases

Smart Buildings and Infrastructure

Digitized Maintenance and Optimization

• Predictive maintenance
• Condition-based maintenance
• Fault detection and diagnostics
• Asset optimization
• HVAC optimization

Building Performance Optimization

• Energy optimization
• Facility workflow optimization
• Lighting control and optimization
• Workspace optimization
• Integrated life safety
• Indoor air quality

Simulation, Modeling, and Visualization

• Planning and design optimization
• Digital twin
• Reality capture
• Visual analytics
• Construction workflow optimization

Home Automation and Personalization

• Home automation and control
• Home appliance control
• Personalized user experience
• Customer experience management
• Home and social robots
• Other AI-enabled health monitoring devices and systems
• Indoor air quality

Indoor Environmental Control and Monitoring

• Energy monitoring
• Indoor climate control
• Home awareness system

Growth Drivers

• AI enables building performance optimization, leading to increased operational efficiency and lower costs.
• Increasing pressure on achieving decarbonization and sustainability objectives to boost demand for AI-driven digital solutions in buildings.
• Growing demand to manage communication channels in property/rental/lease management to further demand for generative AI-enabled customer support.
• Growing need for personalized user experience in smart homes to drive demand for next-generation voice assistants and AI-enabled customer experience management.
• More natural disasters to enhance demand for AI and digital twin-powered climate science models for climate predictions and disaster management.

Growth Restraints

• Choosing the relevant AI applications and use cases providing faster return on investment is a barrier to AI adoption.
• Financial barriers coupled with the complex implementation of AI-enabled digital building solutions into legacy building systems restrain market adoption.
• Data security and privacy concerns to hinder market growth.
• Lack of awareness of the potential benefits of AI integration in the built environment to restrain market growth.