Demand for smart, sustainable buildings is slowing as the property sector struggles to turn connected technologies and sustainability pledges into measurable operational gains, according to new research from the Royal Institution of Chartered Surveyors.
RICS’s 2025 Sustainability Report shows that the share of professionals reporting rising demand for sustainable real estate has fallen to 30%, down from 41% a year earlier, despite growing deployment of sensors, building management systems, and connected devices. High upfront costs, uncertain payback, and limited use of performance data are weighing on investment decisions.
A central problem, the report suggests, is that data from connected buildings is often underused or not captured at all. Almost half of construction professionals surveyed said they do not measure carbon on their projects, and only a small proportion said carbon assessments influence design or operational decisions.
For the IoT community, this highlights a disconnect between connectivity and outcomes. Buildings may be equipped with smart systems, but without continuous analysis and optimisation, performance frequently falls short of expectations.
Energy optimisation specialists argue that the market is constrained less by technology availability than by how data is applied. Donatas Kar?iauskas, Chief Executive Officer of Exergio, said the sector is failing to link real-time building data with financial and environmental results.
“Connected systems generate huge volumes of information, but much of it is not turned into actionable insight,” Kar?iauskas said. “Investors want proof that smart and sustainable buildings deliver lower operating costs. Without clear, verifiable performance data, demand will continue to weaken.”
RICS data shows that uncertainty over return on investment remains the leading barrier to sustainable building investment, cited by 35–46% of respondents. From an IoT perspective, this uncertainty is often tied to a lack of continuous monitoring and benchmarking across building portfolios.
The report also points to diverging priorities between building users and asset owners. Occupiers place the highest value on indoor environmental quality and energy efficiency, while investors focus more heavily on certifications and resilience features. This split can leave connected systems underutilised once a building is in operation.
Measurement and skills gaps remain significant. Roughly half of respondents said they do not assess embodied carbon, only 17% believe the industry has sufficient sustainability knowledge, and just 10% are very familiar with whole-life carbon methods. As a result, many decisions rely on estimates rather than live operational data.
Advocates of advanced analytics and automation argue that this is where IoT platforms combined with AI can play a decisive role. By collecting real-time data from existing building systems, interpreting it automatically, and adjusting operations continuously, digital optimisation tools aim to bridge the gap between smart infrastructure and actual performance.
While RICS stops short of endorsing specific solutions, the report underscores the need for better use of operational data if sustainability targets are to be met. Without stronger links between connected systems, performance measurement, and financial outcomes, the promise of smart buildings risks remaining largely theoretical.
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