There is always a conversation about how Australia picks on new technology after it has had some traction in other parts of the world. There is predominantly a delay in the release of products and technologies that come out of Europe, USA or Asia.
But no, that’s not necessarily a bad thing! There is enough that goes around the meantime for the technology to be tested, and concerns ironed out with multiple trials. So, when we do get hold of it, it is pretty much a stable version of it!
Smart home technology and its integration have seen a similar pattern. However, it is one space where we are observing a speedier pick-up. 2020, with the backdrop of COVID and people being more inbound at home than ever before, has only accelerated the progress.
North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa are the leading regions to drive market growth, revenue, and higher profits from the home automation segment. But it is interesting to note that nearly one-third of Australians seem to be interested in smart technology and home automation ideas while buying a new home. These are as per very recent studies. By 2021, the number of households in Australia implementing the concept of the Internet of Things (IoT) to their lifestyle is expected to rise to 1.6 million.
Let us dig a little deeper into this and understand how the trends are looking across the globe, and closer home here at Australia, on the smart home automation front.
A quick recap on the basic concepts here, in case you haven’t read our 101 blog:
Smart home devices, simply put, are those that can be controlled remotely from any net-connected place in the
world, using a mobile or any other such networked device. It also allows one to pre-set sequences of actions/reactions/tasks as needed.
A smart home is one that has its devices configured and connected through the internet, and the resident can control or regulate all or any of the functions. Be it the security access to the house, lighting setting, the HVAC settings, entertainment unit or even kitchen appliances. It is the Internet of Things (IoT) on the domestic front.
Now, getting back to the discussion on trends and opportunities…
The rise of home automation worldwide
Let us look at some published stats here. Numbers are always a good starting point!
Smart home integration is gaining global popularity – especially in the wake of COVID19. The smart homes market was initially valued at USD 64.60 billion in 2019 and is now expected to rise to USD 246.42 billion by 2023. This is at a CAGR of 25% spread over the forecast period 2020 to 2025.
Multiple factors are contributing to this growth; some of them have seen acceleration these past months:
- The increasing need to counter security issues is expected to feed the demand growth for smart and connected homes.
- Rapid adoption is seen across residential applications with more people living and working out of homes this year, thanks to the pandemic.
- Increasing demand for smart devices/features that enable convenience and ‘experience’ – be it from an aspect of remote access/ control/ operation and overall elevation to the lifestyle.
- Introduction & increased application of innovative wireless technologies in the last couple of years (and continuing), is expected to promote market growth – this is widely visible in areas of HVAC, security access regulators and entertainment controls,
- Further advancements in the Internet of Things (IoT) has seen some dynamics in play, including price drops in sensors and processors. This is expected to encourage manufacturers to promote automation in the household sector.
- Increased internet accessibility and IoT penetration leading to advancements in the machine to machine (M2M) communication – this has encouraged users to adopt the smart home automation technology, further accelerating the market growth in the forecast period.
- The ecosystem is also set to expand further thanks to the 5G implementation.
- IoT investments by the giants in the space from Apple, Google to Amazon, has transformed and continues to impact the smart home landscape.
When we break it down geographically, the United States leads the smart home segment. It is the largest smart home market in the world clocking in a revenue of USD 27.6 billion this year. China ranks second.
Germany and the UK are both close on the heel, followed by Japan ranking as the fifth-largest smart home industry globally.
In terms of age groups, 2020 data indicates that a third of smart home device owners are millennials. A whopping 72% of homeowners in the age group 18 to 34 indicated that they would be willing to pay thousands more for a property that comes with smart home technology. 81% of people say that they are more likely to purchase a home with smart technology in place. These stats would look familiar to you from our earlier blogs. We need to note these numbers and look at actionable insights here on.
Trending appliances and services
Smart home appliances and integration services are a crucial part when we discuss the segment as a whole. Research shows the household penetration of smart devices have reached about 9.3% this year and is expected to grow to about 19.3% by 2024. When you look at the revenue or market income in its entirety, it is the smart appliances (in all its categories and variations) that generate the most significant share.
Globally, it was forecasted that consumers would spend about USD 21.5 billion this year, on various devices meant to enhance control/convenience. The end of 2020 would surely throw a bigger number, given the way the year has gone with people being leaning on technology more than ever before. This particular figure is set to jump to USD 39.6 billion by 2024.
In terms of the products/devices, smart security systems and voice assistants dominate in households, globally. This is followed by other utilities such as smart lighting and smart sensor systems.
Energy management solutions also score high on the board – poised to hit a USD 12.4 billion by 2024. Rising energy costs have been driving the adoption of smart energy solutions. Global investment in renewable energy and subsidies for smart devices is expected to boost the concept of IoT at home in the future.
Homebuyers are actively at properties that come equipped with some of these ‘now essentials’. They are willing to spend on technology. Statistics indicate that homeowners worldwide are spending about USD 19.4 billion on security systems alone – this includes your smart security cameras, sensors and locks. This is expected to double up over the next four to five years.
Now, all of the above also shines a bright light on the related Service segment. This is your Smart Home experts who will cater to the needs of builders and homeowners alike, to get their smart home in order – from helping them plan to visualise the right mix of devices, configure and customise for use. Not to mention, the after-service. You have Smart Home experts who now work together with builders, to help up their property quotient by incorporating the right technology.
Australia’s position in the segment, and outlook
Australia is about six to twelve months behind the USA in terms of smart home automation adoption. Reports suggest that 2.3 million Australian households have incorporated smart home technology.
Statista reports indicate that there are at present 1.1 million homes with smart security systems (like network cameras, video doorbells and other security/ access control devices) in Australia – a number expected to double by 2023. In terms of revenue, it is currently valued at USD 1.27 billion, projected to reach about USD 2.44 billion by 2023.
This is a fair indication that Australia’s Smart Home Market IS on the growth trajectory. In fact, published studies have indicated that the Smart Home sector is likely to experience the most significant growth over the next five years, here in Australia.
2021 is being viewed as the year when Australia closes the gap with the global numbers in this segment. Which brings us to – What can you do to benefit from this information? What can you do to ride the tailwinds?
Your position on smart home automation?
Imagine a home where your blinds automatically rise just as the day dawns (or at a time when you want it to dawn for you!). And this action alerts your coffee machine to start brewing your Kickstarter. And all this happens by the time you’ve actually woken up and lodged in your head what day it is!
You then get ready and move out for work. Your front and garage doors lock themselves secure on their own. Your home calls you when you have a visitor while you are away. Your home welcomes you with lights lit up in the evening, and your living room is ready for you to lounge, at just the right temperature.
This was a vision a few years back. This now can be a home owner’s reality.
If you are a builder, you are in the perfect position to enable the adoption of this technology and introduce your buyers to an elevated lifestyle.
And what’s in it for you as a builder? Your property stands to gain value (do read our blog on this!), and you stand to gain a tremendous competitive advantage. It is established that buyers are indeed looking for smart homes, and you will see your sales pick up pace. You will sell more, sell faster.
So, your position should be to harness the power of this technology into your offerings. Get yourself a smart home automation partner to approach this in a structured way. And be a contributor to this upward curve that Australia is on, as we move towards futuristic living.