Building Retrofitting Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented, By Building Type (Residential, Non-Residential), By Type (Retrofitting of Reinforced Concrete Structure, Retrofitting of Masonry Structure, Others), By Method (New Shear Wall, Wall Thickening, Jacketing Method, Epoxy Injection, Others), By Region, By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 125.44 Billion
CAGR (2026-2031)	7.94%
Fastest Growing Segment	Non-Residential
Largest Market	North America
Market Size (2031)	USD 198.39 Billion

Market Overview

The Global Building Retrofitting Market will grow from USD 125.44 Billion in 2025 to USD 198.39 Billion by 2031 at a 7.94% CAGR. Building retrofitting entails the modification of existing structures through the integration of modern systems and technologies to enhance energy efficiency, sustainability, and operational performance. The primary drivers propelling this market include stringent government regulations aimed at decarbonizing the built environment, the urgent necessity to upgrade aging infrastructure, and rising global energy costs that compel asset owners to reduce operational expenditures. According to the International Energy Agency, in 2024, combined spending on building retrofits and envelopes in China, the United States, and the European Union reached approximately USD 120 billion, reflecting a strong commitment to energy efficiency improvements.

Despite this positive momentum, the market faces a significant challenge regarding the high upfront capital expenditure required for deep renovation projects. Many property owners and investors remain hesitant to commit to comprehensive retrofits due to the extended return on investment periods and the logistical complexity of upgrading occupied spaces. This financial barrier often limits the scope of renovation initiatives to minor updates rather than holistic structural improvements, thereby impeding the potential rate of market expansion and delay the achievement of broader sustainability targets.

Key Market Drivers

Stringent Regulatory Mandates for Energy Efficiency and Decarbonization are fundamentally reshaping the global building retrofitting landscape by compelling asset owners to upgrade existing structures to meet tightening environmental standards. Governments worldwide are transitioning from voluntary guidelines to compulsory frameworks, imposing severe penalties for non-compliance and setting clear timelines for performance improvements. A prominent example of this legislative pressure is seen in the European Union, where policy revisions are aggressively targeting the least efficient stock. According to Linklaters, April 2024, in the 'EU “Fit for 55”: The revamped Energy Performance of Buildings Directive' article, the updated directive mandates member states to renovate the 16% worst-performing non-residential buildings by 2030. Such mandates drive market growth by making retrofitting a legal necessity rather than an optional enhancement, ensuring a steady pipeline of renovation projects across commercial and residential sectors.

Favorable Government Incentives and Green Financing Initiatives are acting as a critical counterweight to regulatory pressure, lowering the financial barriers associated with comprehensive building modernization. Recognizing that high upfront capital costs often deter deep renovation, public and private financial institutions are deploying substantial capital through grants, low-interest loans, and guarantees designed to de-risk investment. For instance, according to the National Wealth Fund, October 2024, in the 'National Wealth Fund, Barclays UK Corporate Bank and Lloyds Banking Group join forces' press release, the organization announced a £1 billion funding package to accelerate social housing retrofits in the United Kingdom. This influx of dedicated capital is essential to address the scale of the climate challenge, as the current pace of improvement remains insufficient. According to the Global Alliance for Buildings and Construction, March 2024, in the 'Global Status Report for Buildings and Construction 2024', operational carbon emissions from the building sector reached a record 9.8 gigatonnes of CO2 in 2023, underscoring the urgent market need for accelerated, funded intervention.

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Key Market Challenges

The high upfront capital expenditure required for deep renovation projects constitutes a substantial impediment to the expansion of the Global Building Retrofitting Market. While asset owners recognize the long-term operational savings of energy-efficient systems, the immediate financial burden of comprehensive structural upgrades often outweighs projected future gains. This capital intensity forces many investors to delay decision-making or scale down ambitious retrofitting plans into minor, superficial updates that fail to generate significant market value. Consequently, the market experiences a prevalence of shallow renovations, which restricts the revenue potential for specialized retrofitting companies and slows the overall adoption of advanced building technologies.

According to the Royal Institution of Chartered Surveyors, in 2024, approximately two-thirds of global industry professionals identified financial constraints as a critical obstacle hindering construction and retrofitting activity. This data underscores a persistent gap between the desire for sustainability and the liquidity available to execute it. When capital is inaccessible, the volume of high-value contracts diminishes, directly reducing the compound annual growth rate of the sector and leaving a significant portion of the global building stock inefficient.

Key Market Trends

Implementation of AI-Driven Predictive Maintenance Platforms is revolutionizing the Global Building Retrofitting Market by replacing static, manual audits with dynamic, data-centric renovation strategies. These sophisticated platforms utilize machine learning algorithms to process vast datasets from building management systems, predicting equipment failures and identifying optimal intervention points before costly breakdowns occur. By simulating various retrofit scenarios, AI tools enable property owners to visualize return on investment with high precision, thereby reducing the risk of project overruns and encouraging more complex modernizations. According to JLL, November 2024, in the 'Streamline Sustainable Asset Enhancement with AI' article, current artificial intelligence capabilities can potentially optimize an estimated 65% of sustainable asset improvement-related tasks, spanning from initial energy modeling to final construction delivery.

Simultaneously, the market is witnessing a decisive Transition Toward Electrification and Heat Pump Deployment, driven by the technical necessity to decouple building operations from volatility in fossil fuel markets. This trend involves the systematic replacement of legacy combustion boilers with high-efficiency electric heat pumps, which serve as the cornerstone for net-zero pathways and allow structures to fully leverage renewable grid energy. This technological pivot is supported by massive financial mobilization aimed at modernizing energy infrastructure across residential and commercial sectors. According to the International Energy Agency, November 2024, in the 'Energy Efficiency 2024' report, combined investment in end-use energy efficiency, including electrification technologies like heat pumps, was projected to reach approximately USD 660 billion in 2024, reflecting the massive scale of capital underwriting this transition.

Segmental Insights

The Non-Residential segment is emerging as the fastest growing category in the Global Building Retrofitting Market, driven by increasing pressure to modernize aging commercial infrastructure. This accelerated expansion is heavily influenced by rigorous regulatory frameworks, such as the European Commission’s Energy Performance of Buildings Directive, which enforce strict energy efficiency standards for public and commercial facilities. Additionally, facility owners are prioritizing retrofits to significantly lower operational costs and align with corporate sustainability mandates. These combined economic and regulatory factors are propelling the widespread adoption of modern building systems, thereby fueling the segment's rapid development.

Regional Insights

North America dominates the global building retrofitting market primarily due to the widespread presence of aging infrastructure that requires modernization to meet current energy standards. The region imposes strict energy efficiency mandates which compel facility owners to upgrade HVAC and lighting systems. Organizations such as the U.S. Department of Energy support this growth through favorable policies and financial incentives designed to lower carbon emissions. Additionally, the voluntary adoption of green building certifications from the U.S. Green Building Council further accelerates the demand for retrofitting projects across the commercial and residential sectors.

Recent Developments

• In June 2025, Trane Technologies introduced a new suite of thermal management solutions, including the Air-to-Water Cascade Heat Pump System, specifically engineered for commercial building retrofits. This innovative system was designed to electrify heating by replacing conventional boilers while utilizing a building's existing hydronic infrastructure, thus avoiding the high costs associated with replacing distribution piping. The company emphasized that this technology offered a straightforward and cost-effective method for facility owners to decarbonize their operations. The launch also included updates to building automation systems intended to simplify the management of energy and comfort in modernized facilities.
• In March 2025, Siemens unveiled its Wireless Plug and Play Automation Bundle for small to mid-sized buildings at the ISH trade fair in Frankfurt. This new solution was designed to accelerate the retrofitting process by combining cloud technology with wireless devices, thereby eliminating the need for complex wiring during installation. The system allowed installers to automate building assets quickly and cost-effectively, significantly lowering the barriers to energy efficiency upgrades for existing structures. Alongside the automation bundle, the company showcased the Connect Box, an IoT-based solution capable of integrating with various building management systems to optimize operations and reduce carbon emissions.
• In April 2024, Johnson Controls launched a redesigned portfolio of residential and light commercial HVAC equipment optimized for the low-global warming potential (GWP) refrigerant R-454B. The new suite included heat pumps, air conditioners, and air handlers engineered to meet upcoming environmental regulations while maximizing energy efficiency. A key feature of this launch was the equipment’s compatibility with both new construction and retrofit projects, ensuring that homeowners could upgrade their systems to qualify for tax credits and rebates. The President of Residential and Light Commercial at the company highlighted that the portfolio was designed to reduce installation time and maintenance costs, directly supporting the transition to sustainable building technologies.
• In January 2024, Honeywell announced a strategic collaborative agreement with Analog Devices, Inc. to advance the digitization of commercial buildings without requiring extensive rewiring. The partnership focused on integrating digital connectivity technologies into existing infrastructure to upgrade building management systems efficiently. By utilizing single-pair Ethernet and software-configurable input/output solutions, the initiative aimed to allow building owners to modernize legacy systems, reduce energy consumption, and obtain real-time data insights. This development was particularly significant for the retrofitting market, as it offered a cost-effective pathway to upgrade outdated building networks with minimal upfront capital and labor.

Key Market Players

• Siemens AG
• Johnson Controls International PLC
• Schneider Electric SE
• Honeywell International Inc.
• Kingspan Group
• Saint-Gobain S.A.
• Owens Corning
• Rockwool International A/S
• 3M Company
• BASF SE

By Building Type	By Type	By Method	By Region
Residential Non-Residential	Retrofitting of Reinforced Concrete Structure Retrofitting of Masonry Structure Others	New Shear Wall Wall Thickening Jacketing Method Epoxy Injection Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Building Retrofitting Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Building Retrofitting Market , By Building Type:

• Residential
• Non-Residential

• Building Retrofitting Market , By Type:

• Retrofitting of Reinforced Concrete Structure
• Retrofitting of Masonry Structure
• Others

• Building Retrofitting Market , By Method:

• New Shear Wall
• Wall Thickening
• Jacketing Method
• Epoxy Injection
• Others

• Building Retrofitting Market , By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE