The green buildings market is estimated to be valued at USD 565.33 Bn in 2024 and is expected to reach USD 1,060.50 Bn by 2031, growing at a compound annual growth rate (CAGR) of 9.4% from 2024 to 2031. The green buildings market is expected to witness significant growth over the forecast period due to growing awareness about cost and energy savings from green buildings.

Market Driver - Rising Energy Costs and Focus on Energy Conservation

Rising costs of energy have been a major concern globally for both commercial and residential buildings. Buildings traditionally account for around 40% of the total global energy usage and this massive consumption places tremendous stress on existing energy infrastructure.

This is driving greater focus on designing structures that can achieve significant cuts in electricity, gas, and water usage through passive solar orientation, smart sensor-based lighting and temperature controls, double or triple glazing, high-performance insulation, and rainwater harvesting systems. Many green building standards now set ambitious targets for lowering energy use intensity through such integrated design approaches.

The increased popularity of renewable energy adds another dimension of variability in prices. Green buildings with their lower energy footprint provide better protection against price shocks and also offer longer-term cost stability. This has been a major pull factor boosting demand for sustainable construction practices. Strategies to optimally utilize natural resources and incorporate energy-savings will remain a focus for players in the green buildings market.

Market Driver - Government Incentives and Certifications Promoting Eco-friendly Construction

Governments across the world have woken up to challenges of climate change and decreasing availability of natural resources. Major certification programs backed by regulatory bodies highlight resource-efficient properties supported by verification of criteria such as usage of recycled materials, optimized energy and water use, indoor pollution control etc.

Monetary incentives in the form of tax exemptions and subsidized financing encourage wider adoption of sustainable techniques. Green mortgages as well as lower insurance premiums for certified green buildings further sweeten the value proposition. Such complementing policy framework creates a thriving ecosystem supporting research & development of advanced green technologies.

Manufacturers gear up to cater to emerging market opportunities with new product introductions adhering to established green building frameworks. Overall, a favorable macro-level policy push plays a key role in normalizing green buildings as a mainstream choice with clear short and long-term benefits to environment as well as ownerships economics.

Market Challenge - Higher Initial Construction Costs Act as a Financial Barrier

One of the key challenges faced by the green buildings market is the higher initial construction costs associated with building green structures. While green buildings may have lower operating costs over the lifetime through greater energy efficiency and reduced utility bills, the upfront capital expenditure for green building technologies and certifications is significantly higher compared to conventional buildings.

Some of the factors that contribute to higher construction costs include the use of green building materials, energy efficient equipment and appliances, water conservation systems, renewable energy integration, and the certification process associated with green rating programs.

Financial barrier has deterred many builders, developers, and real estate investors of green buildings market from actively pursuing green developments, especially in the residential sector. With buyers also reluctant to pay a premium for green homes due to lack of demand and awareness, high initial costs have remained a major roadblock to adoption of green building practices.

Market Opportunity - Expansion of Renewable Energy Solutions like Solar Panels and Wind Turbines

One significant market opportunity for the growth of green buildings market lies in the expansion of renewable energy solutions like solar panels and wind turbines. With technological advancements and economies of scale, the costs of renewable energy systems have reduced substantially in the past decade.

With fossil fuel prices fluctuating unpredictably, renewable alternatives are proving increasingly viable and cost-competitive to meet a building's long term energy needs. Many green buildings now have the capability to generate a portion of their own electricity requirements through integrated rooftop solar installations and small wind turbines. This offers energy security as well as long run savings on utility bills.

With environmental considerations rising up corporate and individual agendas, renewable energy solutions provide a compelling value proposition for green buildings. Their proliferation is likely to aid wider adoption in green building market in the coming years.

Focus on sustainable and energy efficient construction materials and technologies: Companies from green buildings market like Armstrong World Industries, Boral, and Kingspan have focused on developing and supplying sustainable construction materials that improve energy and water efficiency of buildings.

Obtain green building certifications: Leading builders like Skanska, Lendlease, and Turner Construction ensure that the commercial buildings they develop receive certifications like LEED by the USGBC or BREEAM by BRE Global.

Focus on government funded green building projects: Major contractors like Ferrovial and Vinci have capitalized on government incentives and subsidies for green construction projects across Europe and North America.

Partner with architecture/design firms: Leaders like AECOM, Jacobs and Arup have formed strategic partnerships with architectural firms to offer integrated design-build services for green buildings.

Insights, By Product Type: Increasing Consumer Preference for Eco-Friendly Exterior Construction Materials

The exterior products segment within the green buildings market holds 55.7% share in 2024, owing to rising preference for sustainable construction materials that aid in reducing environmental footprint and energy costs over the lifetime of a building. Increasing awareness among homeowners and commercial building owners about the financial and environmental benefits of eco-friendly exterior components such as solar roofing tiles, energy-efficient windows and doors, and renewable siding materials is driving higher demand.

Moreover, incentives and tax credits offered by various governments worldwide on the installation of products like solar panels and green roofing are encouraging greater adoption. Sustainability regulations to curb carbon emissions have also boosted the replacement of traditional materials with environment-friendly alternatives in redevelopment and renovation activities.

Insights, By Application: Growing Environmental Consciousness Across Residential Buildings

Within the green buildings market segmentation based on application, the residential segment accounts for 53.6% market share. This can be attributed to rising environmental consciousness among homeowners and their growing understanding of benefits associated with living in eco-friendly dwellings.

Factors such as enhanced comfort, indoor air quality, smaller carbon footprint and reduced energy costs resonate strongly with homeowners and motivate higher investment in green renovations and construction of certified sustainable homes. The younger generations in particular consider environmentally-preferable features as an important selection criterion for their residences.

Additionally, the availability of rebates and incentives on installing green building techniques such as energy-efficient appliances and renewable energy systems make sustainable residential properties a financially viable option. This has triggered wide-scale adoption of green homes with stricter codes pertaining to resource efficiency in the residential segment of the green buildings market.

• Adoption of LEED Certification: There has been a 25% increase in buildings obtaining LEED certification over the past year, highlighting a significant shift toward sustainable construction standards globally.
• Government Incentives: Various governments are offering tax rebates and incentives for green building projects, encouraging developers to adopt eco-friendly practices.
• Asia-Pacific Growth: The Asia-Pacific region is projected to experience the highest growth rate in the green buildings market, with a CAGR of 12% from 2024 to 2031, driven by rapid urbanization and supportive government policies.
• Energy Savings: Green buildings can reduce energy consumption by up to 30%, leading to substantial cost savings over the building's lifecycle.

The major players operating in the green buildings market include Siemens AG, Johnson Controls International plc, Honeywell International Inc., Schneider Electric SE, United Technologies Corporation, Panasonic Corporation, ABB Ltd, Cisco Systems, Inc., LG Electronics Inc., Oracle Corporation, Skanska AB, Clark Construction Group, AECOM (Formerly AECOM Technology Corporation), Gilbane Building Company, Hensel Phelps Construction Co., JE Dunn Construction Group, McCarthy Building Companies, Inc., Lendlease Corporation, and The Whiting-Turner Contracting Company.

• In September 2023, Lendlease Corporation: Partnered with Renewable Energy Co. to integrate solar panel installations in all upcoming projects. This collaboration enhances energy efficiency and reduces operational costs, setting a new benchmark in green building practices.
• In June 2023, Skanska AB: Launched a new eco-friendly construction material line aiming to reduce carbon emissions by 30%. This initiative strengthens Skanska's position as a leader in sustainable construction and is expected to influence industry standards significantly.

• By Product Type
  • Exterior Products
    • Roofing
    • Windows
    • Siding
  • Interior Products
    • Insulation
    • Flooring
    • Cabinets
• By Application
  • Residential Buildings
  • Commercial Buildings
  • Industrial Buildings