Market Trends of Europe Building Automation Systems Industry
The Commercial Segment is Expected to be the Largest End User
- The commercial segment includes offices, hospitals, retail space, and infrastructure. Advancements in various technologies and the rapid increase in traction of the Internet of Things (IoT), the integration of machine learning (ML), artificial intelligence (AI), and smart sensors and technologies in various end uses and appliances, devices, and products and appliances in commercial buildings are key factors expected to continue to support revenue growth in the market.
- As per the Buildings Performance Institute Europe (BPIE), building automation is cost-effective for all commercial buildings, regardless of energy prices, usage, and climatic factors, provided it is correctly installed, commissioned, and operated. According to the organization, the average net energy savings per installation are about 37% for space heating, water heating, cooling, and ventilation, and 25% for lighting.
- Further, a regulatory decree in Europe requires all large non-residential buildings to be equipped with the main building automation functions by 2025. Such regulations also positively impact the market demand for this segment. In addition, the rising security concerns in commercial buildings act as a driver for the market. Building automation systems can help improve security in a commercial building by controlling access to certain areas and monitoring activity. These systems can also help improve safety by detecting fires and other emergencies.
- The value of the commercial real estate market is increasing, further driving the segment and market. For instance, according to EPRA, Germany, the United Kingdom, and France had Europe's largest commercial real estate markets in 2023, amounting to almost half of the total European market. In Germany, the market size of commercial real estate was approximately USD 1.9 trillion.
- Also, the rising number of retail outlets in the emerging European countries will drive the market growth. For instance, according to Retail-Index, as of February 2023, fashion and clothing was the leading industry in terms of retail chains in Czechia, with 38 chains, followed by sports and leisure with 29 retail chains. Personal care, footwear, and leather shared third place, both standing at 20 chains, while the baby wear industry showed the smallest amount, with four retail chains.
Understand The Key Trends Shaping This Market
Download PDF
Germany to Hold Significant Market Share
- The rise in government policies toward energy-efficient products in the country is anticipated to drive the market. For instance, the revised Building Energy Act was published in the Federal Law Gazette on August 13, 2020. The Federal Ministry of the Interior and Community and The Federal Ministry for Economic Affairs and Energy proposed the Buildings Energy Act, which was presented by the Federal Government. On June 18, 2020, the German Bundestag approved the Building Energy Act. The coalition agreement, the decisions made at the 2018 housing summit, and the measures outlined in the Climate Action Programme 2030 are all enforced through the Structures Energy Act, which regulates energy efficiency laws for buildings.
- According to the Federal Statistical Office of Germany, in March 2023, the construction of 24,500 dwellings was permitted in Germany. Such construction permits will enable local and international building automation firms to develop new products according to customers' requirements and capture market share.
- Also, the market in Germany has witnessed substantial growth due to a rise in infrastructure development and growing demand for green buildings. According to the OECD, Germany aims to raise the share of renewables from 17% to more than 80% in 2050 while phasing out electricity production from nuclear power plants. Greenhouse gas emissions have been shortened by 40% and are estimated to be cut by at least 80% by 2050.
- The demand for smart building control has increased due to the reported benefits of these systems. Notably, the pandemic has significantly changed the approach to building management and solutions, and new methods have quickly been accepted.
- Moreover, increasing construction activities and the rise in disposable income increased the adoption of building automation systems among a broader consumer base in the country. According to the Statistisches Bundesamt, it is expected that revenue from the construction of residential and non-residential buildings in Germany is projected to be approximately USD 89.01 billion by 2025.
- In addition, the country's government is focusing on investing in the construction industry to boost the country's growth. For instance, in September 2023, the federal government announced a EUR 45 billion (USD 48.13 billion) investment in the construction industry amid the real estate crisis. To address the housing shortage, Berlin has pledged to spend EUR 18 billion (USD 19.25 billion) on developing affordable housing by 2027, with additional funding coming from the state and federal governments.
Get Analysis on Important Geographic Markets
Download PDF
