The following market trends came from ABI Research’s Smart Apartments and Multiple Dwelling Units research analysis report.
ABI Research’s recent post on smart apartments shed light on the practicality of using innovative technologies that were once exclusive to homeowners in the Business-to-Business (B2B) space. As the data ABI Research recently uncovered goes to show, the smart apartment market is on pace to be worlds apart from what it is now. Compared to the US$459 million total smart apartment revenue expected to be generated in 2022, that figure is expected to be more than US$13.3 billion in 2030.
As a broad overview, here are some of the biggest use cases for smart home technologies:
- Door locks
- Thermostats
- Water leak sensors
- Lighting
- Indoor plugs
- Virtual property tours
Not only would a smart apartment attract more potential residents, but these innovative technologies provide operational savings, as they lessen the reliance on trained staff, optimize heating and cooling consumption levels, and detect potentially expensive water damage. At the same time, a new revenue stream can be created in the form of a monthly add-on charge as tenants find the convenience of non-basic smart capabilities too good to pass up.
Smart Apartment Data Point #1: United States & European Installed Bases
As of now, smart apartments are still incredibly niche, accounting for just 3% of the total U.S. rental apartment market. In other parts of the world, that number is even lower. However, ABI Research’s smart apartment data indicate a substantial increase in the installed base. Globally, the Compound Annual Growth Rate (CAGR) between 2022 and 2030 will be 49.7%.
Right now, the United States has the greatest installed base by a wide margin (see the chart below for reference). However, Western Europe is going to see an explosive growth trend, with a 2022 to 2030 CAGR of 77.2%. By 2027, Western Europe will take over as the world’s dominant smart apartment market, with the United States closely trailing. And once 2030 comes around, Western Europe will be in a league of its own, with an installed base of 14.05 million compared to the 8.34 million U.S. installed base.
Although Western Europe will be the leading market, the eastern half of the continent is no slouch. Growing at a CAGR of 76.1% and reaching a 2030 installed base size of 7.25 million apartments, Eastern Europe is comfortably the world’s third largest adopter of smart apartments.
Smart Apartment Data Point #2: Installed Bases for Other Regions
Asia-Pacific’s installed base is expected to see a 65.2% CAGR, penetrating 5.43 million apartments by 2030. One interesting trend that ABI Research’s smart apartment data reveals is that although Asia-Pacific will comfortably outpace the Eastern European market throughout most of the 2020's, it’s the latter that will surge right past the former starting in 2028, and only break away even further in 2029 and 2030.
The markets of Latin America and the Middle East & Africa, although growing steadily, are not going to be significant ones for smart apartment vendors. By 2030, Latin America will have 1.41 million smart apartments and the Middle East/Africa will have an install base of just 410,000 units.
Smart Apartment Data Point #3: Revenue
For 2022, smart apartment revenue in the United States will be US$335.93 million. As adoption continues to grow, revenue will exceed US$3 billion by 2030. Western Europe’s US$43.96 million in 2022 revenue will amount to US$5.1 billion by 2030. Astonishingly, what this smart apartment data means is that, although the Western European market trails the U.S. market by US$292 million in 2022, it will have a US$2.1 billion advantage by 2030.
Eastern Europe and Asia-Pacific smart apartment revenue will gradually surpass the US$1 billion mark in 2029 and, by the end of 2030, each will have revenue of US$2.61 billion and US$1.96 billion, respectively.
Latin America and the Middle East & Africa will continue to fall far behind through 2030. Latin America will represent a US$508.99 million market by 2030, while the Middle East & Africa will represent a US$148.93 million market.
Smart Apartment Data Point #4: Hardware Shipments
Door lock and thermostat shipments will be near parity for the remainder of the decade, with both verticals growing at the same 47.6% CAGR between 2022 and 2030. Smart water sensors, growing at a modest pace with a 48.3% CAGR, are by far the most popular choice among Multi-Dwelling Unit (MDU) owners/managers.
While there will be 890,000 smart water sensor shipments worldwide in 2022, there will only be 520,000 and 530,000 shipments for thermostats and door locks, respectively. Smart water sensor shipments will eclipse 1 million shipments by 2023. By contrast, it won’t be until 2024 that thermostats and door locks reach that milestone. And in 2030, there will be 23.4 million smart water sensor shipments, 13.29 million door lock shipments, and 13.17 million thermostat shipments.
Other smart apartment hardware, such as smart blinds, voice control front ends, smart lighting, and smart plugs, will remain a lot more niche as shipments will be relatively low. By 2030, none of these niche devices will surpass 5 million annual shipments.
Smart Apartment Data Point #5: Device Revenue
Although smart water sensors will continue to lead the way for total shipments, revenue is a different story given the higher cost and higher priority of door locks. For example, in 2030, smart door lock revenue will reach US$1.7 billion, while smart water sensor revenue will be US$330.70 million.
By the same token, ABI Research’s smart apartment data show that thermostat revenue also outpaces water sensors, with 2030 revenue of US$452.06 million. It should be noted that door locks and thermostats already generate more sales than smart water sensors, so it’s not just a long-term forecast.
Revenue for smart controllers is sitting at US$78.42 million in 2022. Growing at a CAGR of 37.7% between 2022 and 2030, controller revenue will transcend the US$1 billion mark by the end of the decade.
The chart below breaks down the smart apartment device rebenue by technology type.
Smart Apartment Data Point #6: Connectivity Protocols
For smart apartment controllers, the three most common connectivity protocols used are Wi-Fi, Bluetooth single mode, and Z-Wave. And for short-range device connectivity, the trend is the same, with Z-Wave comfortably being the popular choice. This is largely due to the trust and mass adoption of Z-Wave in the leading U.S. market.
By 2030, Bluetooth single-mode device connectivity revenue will still be roughly US$15 million behind Z-Wave revenue. Wi-Fi will trail Z-Wave’s US$48 million 2030 revenue by more than US$29 million. Thread, although significantly behind Z-Wave and Bluetooth single mode, is expected to gain traction in the coming years as more support for Matter is pushed.
Destined for Growth
The smart apartment market may be small right now, but it’s steadily advancing toward mainstream status as more players are introduced and MDU owners/managers learn about the financial incentives and risk mitigation benefits that accompany smart devices. Whereas the installed base is just 3% of all U.S. apartments right now, by the end of the forecasted period for ABI Research’s smart apartment data, about a third of U.S. apartments will use smart technologies.
As the rest of the world markets take their cue from the leading U.S. market, substantial adoption rates are expected in other regions too, most notably in the European markets. The apartment renting lifestyle is much more commonplace in Europe, so it will eventually become the market leader as it represents greater market potential. It’s clear from our research that the biggest revenue driver for smart apartment hardware comes from security, with smart thermostats and smart water sensors receiving considerable interest.
As building owners continue looking for new Return on Investment (ROI) avenues, the industry will see exceptional investment. As the overall installed base is currently low, key players will focus on onboarding as many new clients as possible and will promote brand loyalty early, so they establish a firm foothold in major markets.
To learn more about the revelations and market trends surrounding smart apartment data, download ABI Research’s Smart Apartments and Multiple Dwelling Units research analysis report. This report is part of the company’s Smart Homes & Buildings research service, which includes research, data, and ABI Insights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.
