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Development of an age-friendly built environment, including smart home solutions
Brief description of the opportunity
Most of Europe's current housing stock is designed for a particular type of household - single person, couples without children, families, etc - and we rely on markets to match supply with need. Homes are not designed to be adapted over our life-course. Building new homes that are designed to allow spaces to be reconfigured (e.g. downsized) would be a great development. It would also potentially help unlock massive underutilized capacity in the housing stock, where a growing number of large family homes are occupied by single people while there is a general shortage of homes for younger people. Such new buildings could be equipped with smart home technologies, or incorporate the infrastructure which will allow for a later addition of such technologies. Smart home solutions can help increase both the security and comfort for older people. Smart home solutions can also consist of basic house upgrades/retrofitting focusing on improving the functional autonomy and life quality at home, thereby enabling people to stay in their own home for longer. The development of adaptable housing and the introduction of smart home solutions can also be extended to social housing, rental housing, residential care and even tourism.
The market potential here is large, both in respect to smart home technologies (e.g. home automation, energy management, security) and new and refurbished homes that are designed to be smart. The market for the former was estimated to be around €3 billion in 2016 and projected to increase to almost €20 billion by 2021, with market penetration growing at similar rates, from around 3% of homes today to around 20% in 2021. Market research companies are projecting strong growth in Ambient Assisted Living, but only from 2020, on the assumption that any meaningful market activity will be triggered by more tech-savvy people getting older (i.e. todays over-50s become tomorrows over-60s and will more naturally and confidently invest in smart home solutions to improve their living experience). Europe’s housing market runs into the hundreds of billions annually and a move to more universal and smart design would undoubtedly give a boost to new build projects and larger-scale refurbishments. There are however many obstacles – many financial – that will limit the rate of progress, holding back demand among individual householders.
What is needed is a dedicated and concerted set of actions at European, national and regional levels to take a fresh look at innovating smarter new build and retro-fit home environments, with a view to empowering an ageing population to live more meaningful, independent, connected lives with dignity and autonomy. Results need to inform a European Reference Framework for Age-friendly Housing to boost knowledge and investments in the construction and ICT sectors. Examples could build on existing practices such as the Moselle Council in France project call “Innovative and Solidarity in housing” (Habitat innovant et solidaire). This project involves the testing with social landlords and local enterprises of building smart residences with services, including IT solutions. It also includes a digital services platform to find sustainable solutions for the elderly (technologies for wellbeing and automation, prevention, information and communication, telemedicine).
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Barriers and market failures
Barriers and market failures for adaptable and smart home solutions lie both within the demand as well as the supply side. In addition, they are regulatory barriers.
The most prominent barriers on the demand side are the costs and the reluctance to use technical solutions. The costs can be a hindrance for users to adopt adaptable and smart home solutions. This applies both to new buildings being constructed as adaptable and smart homes, as well as to retro-fitting existing homes. It is estimated that adapting an existing home costs between €8.000 and €20.000 for ICT adaptations, and €10.000 to €85.000 for spatial adaptations (Cross-DG Working Group on the European Silver Economy: “Growing the Silver Economy in Europe”, November 2014). While retro-fitting is possible, it is both easier and cheaper to integrate the infrastructure for smart home technologies into new buildings designed to be used with such solutions. These costs can be equally prohibitive for tourism providers, who are considering to build or re-fit hotels to be accessible and suitable for older people. In addition, some older people are hesitant to use smart home technical solutions because they are worried that the new technology would be complicated to use, and that they could not keep up with the latest technology. There may be additional reservations in relation to data security and surveillance, as well as worries that social contacts will be replaced by technical solutions.
On the supply side, the professionals, which should be the experts who build adaptable and smart homes and install the respective technologies, may have a lack of adequate skills to perform these tasks. If these professionals, such as architects and engineers, have no knowledge of such solutions, then they can present a barrier to end-users accessing such solutions, even if end-users would be willing to pay for the technologies and their installation. A second issue is the compatibility between smart home components. While the companies on the supply side do provide technical solutions for smart homes, these solutions are often not compatible with each other, as there is no accepted industry standard in the smart home field. Therefore, different communication protocols are used, which are proprietary and incompatible with each other. If such protocols are proprietary, their use will prohibit other solutions to be created to fit within the system. While smart home technologies do work in isolation to some extent, for a true smart home technologies need to communicate.
Finally, there are regulatory aspects which can be a barrier. This relays mainly to the overlap or gaps of regulations for buildings and electronics which both apply to smart homes, and to issues of data protection which need to be considered in the context of smart homes.
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Market prospects – size, growth trends and scalability
Several million new homes are built in Europe every year and very few have adaptable, universal designs. The potential market within the refurbishment sector is likely to be larger still, as newly built housing makes up about 1% of the renewal of the residential buildings’ stock (Cross-DG Working Group on the European Silver Economy: “Growing the Silver Economy in Europe”, November 2014). The market potential here is large, the market for smart home technologies alone was estimated to be around €3 billion in 2016 and projected to increase to almost €20 billion by 2021. Ambient Assisted Living is projected to grow strongly from 2020 onward, based on the assumption that a ‘new’ generation of older people, who are more tech-savvy then the previous generation, will grow older and be more inclined to invest in smart home solutions. Europe’s total housing market runs into the hundreds of billions annually and a move to more universal and smart design would undoubtedly spur new build projects and larger-scale refurbishments. In addition to private homes, care home settings could also benefit from such adaptable and smart home solutions. Such solutions could also be of much benefit to older people living with dementia, especially to increase their safety in home settings. There are currently estimated to be over 10 million people with dementia in the EU, and the numbers are likely to increase in the coming years. The move to adaptable and smart housing would provide a boost to the European economy, with designers, house-builders and building services benefiting from slightly more intensive activity within the new build sector and an upswing in major refurbishment work. Most of the additional work and income would occur locally, within the EU, albeit there may be some increased demand for smart home technologies from other international technology suppliers.
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Challenges - identified need for action
With increasing age, the characteristics a suitable home environment needs to fulfil can change drastically. Many homes at present are not built to adapt to such changes, nor include smart home solutions. This leads to many older people living in houses and flats which pose unnecessary hurdles for independent living in older age. With adaptable and smart home solutions, such homes could be updated or built to support independent living of older people better. In addition, the lack of accepted standards leads to a fragmentation of the smart home solutions being offered due to their incompatibility.
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Added value of EU action
The fact that the EU takes action in the field of adaptable and smart home solutions can lead to increasing visibility and credibility of the initiatives which already exist, some of them nationally or regionally. This could also increase both the knowledge about and the acceptance of such solutions with users as well as suppliers. EU action can furthermore help to create a common European market for such solutions by encouraging the setting of standards, thus potentially opening a wider market for national companies beyond their domestic markets. Furthermore, the EU could also encourage the use of common communication protocols, to increase the interoperability between smart home technologies. Beyond Europe, such a concerted effort could also increase the standing of Europe as an important player in this field, and establish a favourable market position against competitors from other countries, notably the US and Japan, which would be unlikely to be achieved by national initiatives only.
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Existing or planned initiatives to build on
Several EU member states have been active in the field of smart and adaptable home solutions. These initiatives aim at supporting the networks of companies, increasing knowledge and acceptance, implement adaptable and smart home solutions on a larger scale and supporting adaptable and smart home solutions in the field of tourism. The German state of Baden-Württemberg has published a compass on their policies regarding senior citizens. This includes initiatives which aim at capitalising on the market for smart home solutions, including setting up the network initiative Smart Home & Living BW for companies, institutions, networks, associations and research centres involved in developing and providing such solutions. The aim is to enable companies in the federal state of Baden-Wuerttemberg to exploit the vast market potential, the economic chances and the developments in the area of smart home & living. In addition, the state is aiming to increase the end-user acceptance of smart home solutions by getting older people in touch with ICT more generally, in order to lessen their inhibition use ICT solutions in the smart home context. Furthermore, a mobile AAL exhibition is funded, which showcases AAL solutions to increase the awareness and knowledge about AAL, this exhibition is set up alongside events which are popular with older people. The French Lower Rhine Council, in cooperation with municipalities, has co-financed a dozen of residences based on new care solutions for social housing, which include ICT solutions, thus supporting the implementation of smart home solutions on a larger scale. In terms of providing guidance for how to build adaptable homes, the UK Lifetime Homes design guide implements the concept of adaptable housing, in addition the website provides case studies of existing homes and advice for professionals. Another UK project is SPHERE, which is a multidisciplinary project between the universities of Bristol, Reading and Southampton. Within this project, researchers are developing a Sensor Platform for Healthcare in a Residential Environment. This platform consists a number of different sensors, which include environment and body sensors as well as video monitoring. The ultimate goal is to create a system which can be used to spot issues that might indicate a medical or well-being problem. For the field of tourism especially, the Bartlett Faculty of the Built Environment at the University College London has a newly founded Real Estate Institute through which research and training on the build environment with a focus on Health Tourism and Accommodation are conducted. Through developing research collaborations with tourism schools across Europe they aim to investigate the intersection between health and wellbeing and facilities for tourism.
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Recommended EU policy actions
EU Communication activities about adaptable and smart home solutions both towards users as well as suppliers would increase the knowledge and potentially the acceptance among those groups.
As laid out earlier, one of the barriers for smart home technologies is the lack of common communication protocols, which leads to incompatibilities of different technologies. The EU could take measures to encourage all companies to use a common standard for smart home technologies, which is open-source. This could help to ensure that the solutions which are being developed are compatible with each other, which in turn could lead to more companies developing solutions. Such an increased offer of compatible technologies would then lead to more competition and to more technologies being available at a lower price, which in turn could lead to a larger market for them. This way, increasing demand would help to lower prices further. Lower prizes could furthermore be achieved with a lower VAT rates for adaptable and smart home solutions for older people. While Member States themselves decide on VAT rates, the EU could make respective suggestion.
Lastly, developing standards and regulations for adaptable and smart homes would provide guidance to suppliers and users. Regulations could be harmonised on a European level to address the current gaps and overlaps between different regulations. This would help smart home solutions to be marketable more widely in the common European market.
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Key stakeholders for adaptable and smart home solutions are the inhabitants of such homes, companies which provide the technologies as well as professionals in the building trade which construct, build and re-fit such home, including architects and engineers. For the aspect of tourism, tourism providers which run hotels are key stakeholders, potentially together with tourism boards which may publicise such offers.