This blog is based on the recent analysis Global Homes and Buildings Industry Outlook, 2025, conducted by Frost & Sullivan’s growth expert Anirudh Bhaskaran from the Global Homes & Buildings team.
The homes and buildings industry is at a turning point. What was once centered around hardware and traditional infrastructure is now being transformed by artificial intelligence (AI), automation, and digital intelligence. In 2024, the sector demonstrated strong resilience, growing 6.9% despite global headwinds, thanks to the accelerated adoption of intelligent technologies and sustainability-focused strategies.
Now, in mid-2025, the momentum continues. With projected year-on-year growth ranging from 4.3% to 8.6%, the industry is pivoting toward scalable, software-driven, and outcome-focused business models. As climate imperatives and evolving occupant expectations reshape the built environment, organizations are prioritizing solutions that deliver not just efficiency, but resilience, personalization, and long-term value.
Strategic Imperatives Shaping the Built Environment
- Reinventing Revenue Models: Shifting customer expectations and revenue volatility are pushing providers to adopt subscription-based, outcome-driven models. Data monetization and personalized, AI-powered services are now essential to sustain loyalty and financial resilience.
- Mandating Technology Integration: To remain efficient and relevant, companies must integrate AI, Internet of Things (IoT), and cloud analytics. These technologies are critical for predictive maintenance, energy optimization, and delivering responsive, occupant-centric building operations at scale.
- Meeting ESG and Workforce Demands: Tightening ESG regulations and talent shortages demand urgent digitization. AI-enabled workforce management and connected systems are necessary to ensure compliance, maintain scalability, and meet sustainability goals in dense urban environments.
Key Growth Opportunities in Homes & Buildings
- AI-powered Operational & Energy Optimization: AI is optimizing HVAC (Heating, Ventilation, and Air Conditioning), lighting, security, and fire systems, enhancing safety, comfort, and efficiency. With global AI-driven revenue in buildings set to grow at a 21.6% CAGR through 2029, this segment holds massive potential for disruption.
- Intelligent Services with AI Agents: AI agents are transforming service delivery — automating workflows, personalizing smart home interactions, and enabling flexible pricing models. This evolution opens new revenue streams and boosts customer retention across residential and commercial markets.
- Data-led Construction Management: Digital twins, robotics, and extended reality (XR) technologies are improving accuracy, safety, and cost control across the construction value chain. AI-powered analytics and immersive augmented reality (AR)/virtual reality (VR) training are streamlining labor processes and accelerating sustainable building delivery.
Companies to Action
- Siemens Smart Infrastructure: With a sharpened focus on margin expansion and long-term value creation, Siemens is leading the digital transformation of building operations through solutions spanning building automation systems (BAS), smart spaces, and energy performance.
- Honeywell: Following its strategic restructuring, Honeywell’s new Automation division delivers smart building and BAS solutions that integrate IoT and AI — improving energy efficiency, safety, and sustainability across commercial spaces.
- Schneider Electric: Through its EcoStruxure and AVEVA platforms, Schneider Electric combines AI with automation to drive operational efficiency and decarbonization. In 2024, its digital services posted 11% organic growth, highlighting its leadership in sustainable infrastructure.
Download the full guide for tactical moves to gain a competitive edge
Conclusion: Building Smarter, Greener, and More Adaptive Spaces
The future of homes and buildings belongs to those who innovate. As AI, automation, and connected systems redefine the industry, early movers are already capitalizing on new value streams, through scalable digital platforms, smart service models, and integrated energy strategies.
By aligning operational goals with sustainability mandates, organizations are not only improving performance but also shaping smarter cities, more efficient homes, and resilient infrastructure.
Take the Lead in Intelligent Infrastructure
Access exclusive insights from Frost & Sullivan’s latest analysis on the global homes and buildings sector. Discover the technologies driving transformation, the companies leading innovation, and the strategies enabling future-ready infrastructure.
Download the sample today to explore how AI-powered, sustainable, and digitally integrated solutions are shaping the built environment, and how your business can stay ahead in a rapidly evolving landscape.
Contact us at [email protected] to learn how your organization can lead in the next phase of intelligent homes and buildings.
