Smart technology heads into homes

Early adopters may have some elements of smart tech in their homes but it’s still very much in its infancy in Europe

January 08, 2019

In many cases it’s still homeowners adding features themselves but developers are watching the market closely.

In coming years, the offer of a fridge that knows when you’re out of milk or an automated cat feeder could form part of the offer to buyers of new, off-plan homes. Globally, smart home technology is expected to rise from $35.7 billion to $150.6 billion in the next five years, according to data from Orbis research.

In Germany, where the smart-home market is tipped by consultancy Arthur D. Little and internet association Eco to grow by $4.89 billion by 2022, smart home technology is being enhanced by start-up firms, but still some way from incorporation in new housing schemes, according to Thomas Zabel, head of JLL residential development.

“It will become more commonplace, but so far, smart home technology has been regarded as something of a luxury rather than a must-have,” he says. “For developers, there has been little need so far to offer extras as the German market is not short of buyers.”

The growth of the smart home sector could be conveniently aligned with residential developers, who typically keep a firm focus on the medium term, says Zabel.

Agents and sellers operating in markets and price brackets where there is a greater need to entice buyers are likely to use the incentive, says Nick Whitten, director of UK residential research at JLL. In 2017, when high-end residential sales slowed, London, for example, saw buyers offered free extras – including smart tech.

Growth from the top

Before smart home use becomes mainstream, Whitten says the high-end of the market will be where smart home tech grows out from – similar in its trajectory to the growth of Tesla’s electric cars.

“High-end usage then inevitably trickles down to exponential growth,” he adds.

The arrival of more appliances in the home, will take one of two paths – through the “bolting-on” of gadgets into existing homes – or via new schemes with developers building technology in at initial delivery. Moves in the U.S by online retailers to enter the homebuilding market and offer factory built homes could be the way forward for the inclusion of more smart home technology, says Whitten.

“If we see a pick-up in the amount of homes built using modern methods of construction, then smart home tech will be easier to embed,” he says. “Once you move into a factory scenario, you’re in an environment where you can more easily add in-built smart features.”

Space constraints, as more people move to cities and live in smaller homes, could further boost the smart home sector.

“Watching TV on a window pane may sound futuristic,” he says. “But with less wall areas in the home, the clever use of alternative spaces for domestic entertainment systems is a shot in the arm for smart home tech.”

Then there are the benefits of cost and convenience, for example more people using apps to control their central heating or air conditioning from outside their homes.

“Climate change means it’s imperative we look at reducing emissions and more control of home energy use can only be a good thing,” says Whitten.

Challenges to overcome

For homes to get truly smart, wider network connectivity levels need to “dramatically improve”, says Whitten.

“Think of the typical commuter on the train home who gets stuck in a tunnel or in an area of the city where network connectivity is poor,” says Whitten. “That limits their ability to control their home – be it switching on the heating, lighting or oven remotely.

“So, in a way, it does not matter how “smart” the tech is within the four walls if the user cannot control it,” he adds.

There will come a time, Whitten points out, that UK heating apps such as Hive and Nest simply “know” when a user is closer to home, requiring little or no input.

“That may come sooner than any major network improvements,” he says. “For now, smart home tech is still in its infancy.”

There will, however, come a tipping point, says Whitten, when “people realize the benefits smart home devices can bring to their homes and daily lives. For many people, the prospect of saving time and money will overcome any reticence to having new technology in the home.”