A recurring question is when to invest in IoT and sensors. When it comes to residential properties, adding a set of sensors to each apartment incurs extra costs. If you add sensors before anyone moves in, it increases the initial expense; adding them later means new owners must bear the cost. This creates an intriguing scenario: if you skip the sensors, your apartments may yield a better margin when sold. So, the question to address is how to maximize property value: should you invest in IoT solutions before tenants move in?
Can IoT pay for itself in Property Management
I am currently involved in numerous discussions about water leak sensors. For property owners considering IoT solutions, the key question is whether to invest in these systems before tenants move in or leave these costs to future management. With increasing demands for both sustainability and operational efficiency, IoT is emerging as a crucial tool for reducing costs, enhancing property value, and meeting tenants’ expectations. But can IoT solutions like water sensors really pay for themselves? Below, we break down the facts and calculations, specifically examining the benefits for property owners and managers in a Swedish context.
1. Direct savings: reduced costs
Water damage is one of the most expensive and frequent issues for property owners in Sweden. A single water damage incident can cost between €2,700 and €9,000, depending on the extent of the damage and speed of response. In multi-family residential properties, annual repair costs can easily reach hundreds of thousands of euros. Installing water sensors during the construction phase significantly reduces these risks.
Studies and data from insurance companies suggest that water sensors can reduce water damage costs by up to 70%. This means that even a pre-occupancy investment in water sensors can essentially cover its own costs by preventing future damages. For a property with 500 apartments, where sensors reduce annual water damage costs from €45,000 to €13,500, the savings amount to €31,500 per year. This reduction represents substantial financial relief and demonstrates that proactive IoT measures make sound economic sense.
2. Lower insurance premiums
Another important reason to make IoT investments early is the possibility of lower insurance premiums. Many Swedish insurers offer discounts for properties that can prove risk-reducing installations, such as water sensors. By reducing the risk profile of a property, insurers see it as less costly to cover, which can be particularly beneficial for multi-family properties where the risks of water and other types of damages are high.
An insurance premium of €18,000 per year could be reduced by 10–15% with such preventive measures. For the property owner, this translates to annual savings of €1,800–€2,700. By installing IoT systems in advance, these cost savings can continue over the long term, making them a valuable contribution to the property’s financial efficiency.
3. Reduced operating costs
Installing water sensors from the start also contributes to more efficient water management. By identifying and addressing minor leaks and inefficiencies, the property can reduce its total water consumption by 10–15%. In a property where water costs €135 per apartment annually, this improvement would result in annual savings of €6,750 for the entire building.
In a Swedish setting, where sustainable resource management is prioritized, this operational saving goes beyond the initial installation, supporting future management by lowering the risk of water damage while promoting sustainable use of water resources. For the property owner, these savings make IoT solutions financially self-sustaining.
4. Lower maintenance costs
Early installation of IoT solutions like water sensors reduces the likelihood of extensive repairs due to severe water damage. Water sensors detect minor issues early, allowing for repairs before they impact the property’s plumbing infrastructure. Swedish property managers note that this can reduce maintenance costs related to pipes and water installations by approximately 10%.
If the annual maintenance cost for a property’s piping is €9,000, IoT solutions could save an additional €900 per year through preventive maintenance. In a Swedish property management context, this means fewer extensive and costly interventions, making IoT installations a financially sound investment.
5. BREEAM certification and long-term value
When a property achieves a high BREEAM certification from the start, it strengthens the property’s sustainability profile and attractiveness. Buildings with high BREEAM certification in water and energy management are more desirable in the market, potentially increasing their value. According to industry studies, Swedish and European properties with high BREEAM ratings see a value increase of 5–10%.
For a property worth €9 million, a BREEAM certification could mean a value increase of €450,000–€900,000. While this value increase doesn’t generate direct annual savings, it gives the property owner a long-term return on investment in sustainable IoT solutions. By incorporating these sustainability measures early on, the property owner secures both an enhanced property value and greater market appeal, a particularly compelling factor in Sweden’s highly competitive property market.
6. Reduced tenant turnover thanks to sustainability measures
In Sweden, tenants are increasingly interested in sustainable housing options. A well-maintained property with solid sustainability credentials is attractive to tenants and can reduce turnover rates. With water sensors and sustainability certifications in place, the property becomes a safer, more appealing long-term living environment. Reduced turnover directly lowers costs for property owners, as vacant apartments often require renovations and marketing.
In a property where 5% of apartments see tenant turnover annually, reducing this rate to 3% could save up to €18,000 per year in lower renovation, marketing, and vacancy costs. This offers yet another way that IoT solutions prove their value by contributing to a stable, attractive living environment that encourages tenants to stay.
Conclusion: Should IoT installations be made before move-in?
Given the potential savings and value enhancements that IoT solutions like water sensors offer, the answer is a clear yes – IoT solutions can pay for themselves and provide financial benefits for both property owners and future managers. By installing water sensors and aiming for sustainability certification from the start, property owners can reduce operational costs, increase property value, and demonstrate a commitment to sustainability.
With a combination of lower water damage costs, reduced insurance premiums, less tenant turnover, and more efficient water use, these IoT solutions contribute to significant annual savings. In the long term, it becomes clear that IoT solutions are not simply a cost, but a profitable investment that safeguards both property value and sustainability.