Digital Twin (DT) technology is a pivotal innovation within the built environment industry, facilitating digital transformation through advanced data integration and analytics. DTs have demonstrated significant benefits in building design, construction, and asset management, including optimizing lifecycle energy use, enhancing operational efficiency, enabling predictive maintenance, and improving user adaptability. By integrating real-time data from IoT sensors with advanced analytics, DTs provide dynamic and actionable insights for better decision-making and resource management. Despite these promising benefits, several challenges impede the widespread adoption of DT technology, such as technological integration, data consistency, organisational adaptation, and cybersecurity concerns. Addressing these challenges requires inter-disciplinary collaboration, standardization of data formats, and the development of universal design and development platforms for DTs. This paper provides a comprehensive review of DT definitions, applications, capabilities, and challenges within the Architecture, Engineering, and Construction (AEC) industries. This paper provides important insights for researchers and professionals, helping them gain a more comprehensive and detailed view of DT. The findings also demonstrate the significant impact that DTs can have on this sector, contributing to advancing DT implementations and promoting sustainable and efficient building management practices. Ultimately, DT technology is set to revolutionize the AEC industries by enabling autonomous, data-driven decision-making and optimizing building operations for enhanced productivity and performance.