One unique market for smart spaces solutions is that of smart apartments and MDUs. Smart apartments feature smart amenities for residents, community management solutions, and building automation solutions. These solutions are growing in popularity among MDU property managers and owners in the US and Europe. In Europe, this is noted by investments in property management software, such as Plentific, which raised $100M in funding from Brookfield Asset Management, Highland Europe, and Target Global, among others. Also recently a property technology (proptech) firm based in London, Lavanda, was funded $7.25M.
- 34% of MDU property managers in the US reported offering internet-connected or smart home devices to residents in at least one property that they manage.
- 57% of MDU managers report having a lighting control system in their largest property; 26% have an energy management/monitoring system; and 13% have a smart home device or IoT platform/hub
- 44% of properties with energy management systems incorporate internet-connected devices such as smart thermostats and smart lighting into the system for remote monitoring and control
The use cases and deployments targeting the smart apartment space have many similarities to solutions targeting the hospitality space. However, there are unique factors in the MDU market that introduce additional complexities and challenges.
Dual Perspectives: Residents and Property Managers
Many smart home solution vendors perceive MDUs as a potentially lucrative channel for new business, while traditional MDU technology vendors are making investments to rapidly expand their service offerings, including through acquisitions and IPOs. This market does have unique challenges, for in smart apartments, unlike in other verticals, solutions providers are serving two different clients – the property manager and the residents. The wants and needs of these groups may differ, as do the solutions that best serve them.
Property managers and owners that have installed smart home solutions report significant benefits from these solutions. The top benefits include increased rental revenues, improvements in operating efficiencies, and an increased ability to attract and retain residents.
Parks Associates research finds that over a third of MDU residents are willing to pay an additional 15% per month in rent for smart amenities.
At present MDU owners and managers are less likely to note lower property insurance costs as a benefit, but this will likely increase as the market develops and matures. According to The Wall Street Journal, insurance premiums for apartment communities in the US rose by 33% in 2020 alone. Smart home platform providers can partner with more insurance companies to offer lower insurance premiums to property managers on the basis of the lower safety risks associated with smart home device implementation. This too will drive higher return on smart home device investments for property managers and drive higher adoption rates for device and platform vendors.
This is an excerpt from Parks Associates research on technology in apartment buildings. We welcome your comments and feedback. Thank you for reading our research. I hope you will consider attending our inaugural event, Smart Spaces: Apartments, Hospitality, and Community Living, hosted in Dallas Texas April 17-18, 2023
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