How PropTech and smart buildings improve our well-being and protect the environment



Sep 27, 2023

PropTech has seen many innovations in the past decade, especially with the rise of data collection methods and algorithms to analyze them and make smarter decisions. It has disrupted the whole real estate industry – from construction machinery to property management and finances.

However, the hottest area for PropTech is the sector of smart buildings. This market has exploded, especially in the light of ecodesign regulations and climate goals.

To truly emphasize the importance of the global smart building market, we’ll mention the fact that it’s expected to grow from $80.62 billion in 2022 to $368.62 billion in 2029.

But what’s the deal with smart buildings that attract so many investments? Why do we expect technology to reinvent the way we live and do business in modern buildings?

Can we see real benefits (and lower costs) for the landlords and tenants in the long run?

This article deals with smart buildings. Read our general guide for PropTech to find out more about the benefits of the whole PropTech industry.

What are smart buildings and why are they getting so important?

Smart buildings are commercial and residential buildings with integrated and interconnected technology systems (IoT).

These systems are made of sensors, data aggregation points, and analytics that provide insight and allow for automation, management, and optimization of pretty much everything inside:

  • HVAC (heating, ventilation, air conditioning),
  • security systems,
  • air humidity,
  • elevators,
  • water supply,
  • lighting…

The ability to establish communication between systems by using sensors and software in the building makes it “smart”. There are smart buildings around the world with more than 28.000 sensors that track, automate and optimize everything – from customer service to space occupancy.

Having the data, extracting insights by using Machine Learning/Artificial Intelligence, and being able to make huge commercial and environmental decisions based on them is what makes smart buildings and PropTech so attractive.

Smart buildings play a big role in achieving the net-zero emissions target

Buildings produce 39% of greenhouse gas emissions. The European Performance of Buildings Directive requires all buildings to be renovated in such a way that they eliminate almost entirely their carbon footprint.

To achieve that, they suggest:

  • reducing the use of fossil fuels for heating on-site and off-site to zero,
  • using renewable resources for construction,
  • achieving energy efficiency through energy consumption reduction
  • and digitalization for smarter building management.
HVAC and electricity demand

HVAC and electricity demand

With PropTech in place, you track everything in a building – from HVAC operation, temperature and humidity, to simple things like whether the lights are switched off at the end of the day.

And since air conditioning is consuming so much power, using AI technology to analyze the need for power (e.g. based on weather or space occupancy) and automate the turning off air conditioning units on and off is a smart environmental choice and allows you to stay compliant with the regulations.

See our in-house AI solution for HVAC energy consumption optimization: Optimus Power

With PropTech, landlords optimize profits, costs, and savings

Source: European Commission

According to the Digital Transformation Monitor, put together by the European Commission, the total costs of building during operation:

  • 80% operating costs
  • 40% energy
  • 30% maintenance
  • 10% other costs

The same report states that landlords save up to 32% with smart HVAC and lighting systems.

For example, by tracking data from sensors on all HVAC units, you could take preemptive action before a unit failure and lower the costs for maintenance.

If you track space occupancy or lighting, you could automate scheduling, heating and cooling, power switching and thus reduce the costs of staff, electricity, and other resources.

Tenants in residential and commercial smart buildings experience greater comfort

Smart buildings with PropTech also bring:

As our awareness about our well-being increases, it’s natural that we start picking places where we feel better.

When choosing the suitable place for living or working, all of our reasons usually fall into three categories:

  • Security
  • Comfort
  • Productivity

It’s been proven that indoor air quality affects our productivity. With good systems in place, you could maintain a healthy level.

Monitoring of security systems (like fire protection, trespassing, elevator failures…) ensures your tenants feel safe.

Optimal humidity and temperature control bring a much needed level of comfort.

People are actually quite willing to pay more for such conditions.

PropTech helps bigger companies with plenty of servers (like data centers) lower their costs and provide more affordable services

According to the Review of Data Centers Energy Consumption and Reliability Management

“The data centers will indirectly affect the CO2 emission because of the growing energy demands. The leading IT businesses are building their new data centers in the high latitude areas in the Arctic region (…)

These companies are using the natural advantages to reduce the energy consumption of the data centers, hence indirectly reducing their participation in the CO2 emission.”

And hopefully, reduce their prices along the way.

This is just one example of the growing need for smart technology in commercial buildings because not every company has the luxury to transfer a part of their operations to a more suitable place.

Businesses with a lot of servers need to optimize humidity, energy demand and temperature in server rooms. This might be beneficial for their end users in terms of keeping the lower prices for the same quality of service.

Use data from smart buildings wisely

As you’ve seen, data is an invaluable resource if you gather it correctly, implement technology to analyze it and use the insights to make better decisions in the future for your building.

Apart from making profits and savings for your real estate, and providing greater comfort to the tenants – PropTech is a strong tool for achieving goals and targets set by global climate directives.

Which brings us to the main point – making use of data is a smart decision for our overall well-being.

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