Smart Cities Market Overview
The global smart cities market size was valued at USD 648.36 billion in 2020, and is projected to reach USD 6,061.00 billion by 2030, growing at a CAGR of 25.2% from 2021 to 2030.
The surge in adoption of smart cities in multiple regions is driven by various government digital cites initiatives and rise in the need for better natural resource management in urban environments. In addition, the growth in need for public safety and security fuels the growth of the market. Furthermore, the deployment of 5G network providing high-speed data transmission and low latency, further supports market expansion. In addition, the rise urban populations have led to increase in the need for more efficient management of city services and infrastructure, driving the global smart cities market. However, security concerns associated with smart cities and lack of funding & adequate infrastructure limit the growth of the market.
Conversely, the smart cities market is anticipated to offer numerous opportunities for new players in the market. Rise in smart infrastructure is transforming the landscape, with smart grids modernizing energy networks to be more efficient and responsive, driven by the high demand for energy storage, renewable integration, and real-time energy management. Furthermore, the increase in innovations in smart buildings, such as IoT-enabled lighting, HVAC systems, and energy-efficient designs, are creating opportunities for green building technologies and smart home solutions.
In addition, the rise of autonomous and electric vehicles is accelerating the development of urban mobility infrastructure, including charging stations, smart roads, and integrated transportation management systems. Moreover, the surge in the adoption of electric vehicles (EVs) presents significant opportunities for companies in EV manufacturing, charging infrastructure development, and fleet management solutions. The demand for improved transportation solutions is driving innovations in smart public transport systems, including real-time tracking, mobile payment systems, autonomous buses, and data-driven traffic flow optimization. In addition, the integration of mobility-as-a-service (MaaS) with various forms of public and private transport into a single, accessible, and customer-friendly service, allows city residents and visitors to plan, book, and pay for multi-modal journeys seamlessly. These factors are expected to offer remunerative opportunities for the growth of the smart cities market.
For instance, on November 18, 2024, L&T Technology Services Limited (LTTS) announced a strategic collaboration with the Colorado Smart Cities Alliance (CSCA) to advance smart city projects in Colorado. The partnership aimed to integrate LTTS’s engineering expertise with CSCA’s urban development initiatives. The collaboration focused on smart transportation, intelligent infrastructure, energy management, and data-driven city services, leveraging LTTS’s experience in IoT offerings for city operations, surveillance, and security systems.
The smart cities market insights is expected to offer numerous opportunities for growth. Furthermore, the rise of use of data analytics and AI in managing urban healthcare systems, predicting diseases, and improving treatment outcomes presents significant opportunities. In addition, smart hospitals are emerging through the integration of IoT-enabled medical devices, patient management systems, and intelligent infrastructures, significantly enhancing healthcare delivery. These advancements facilitate real-time health monitoring, early issue detection, and streamlined operations, ultimately improving patient care and resource efficiency.
Moreover, the increase in the demand for smart agriculture is advancing with urban farming and agri-tech solutions like vertical farming, hydroponics, and precision agriculture, which help meet the food demands of urban populations while minimizing resource use. In addition, the use of IoT and blockchain to optimize and enhance the efficiency and transparency of food supply chains in smart cities is creating new opportunities in the agri-tech sector. These factors are expected to offer lucrative smart cities market opportunities for the growth of the global smart cities market.
Smart cities utilize information and communication technologies to achieve long-term economic development, efficient management of resources, and provide a higher quality of life for their residents. A smart city may use its advanced infrastructure to aid the local businesses, environment, transport & mobility, healthcare, lifestyle, and governance. The adoption of smart cities solutions is being driven by rise in urbanization trends across the world, and a desire for a higher quality of life. The key objective of intelligent cities is to create economic growth and improve people's quality of life by empowering local area development and utilizing technology that leads to smart results.
Depending on functional area, the smart infrastructure segment dominated the smart cities marketplace in 2020, and is expected to continue this trend during the forecast period. The growth in digital disruption in people's everyday lifestyles contributes to the growth in demand for smart infrastructure solutions. Moreover, the severe supply chain disruption during the pandemic has further empowered the growth of the segment as businesses rely on smart infrastructure solutions for efficient management of their resources. However, the smart energy segment is expected to witness the highest growth in the upcoming years, as the demand for IoT powered energy applications such as smart energy grids and smart meters are on a rise. Furthermore, numerous government initiates that support the implementation of smart energy solutions are expected to drive the smart energy market segment.
By Component
Hardware segment is projected as one of the most lucrative segment.
Region wise, the smart cities market was dominated by North America in 2020 and is expected to retain its position during the forecast period, owing to the presence of a highly developed ICT sector and high spending that aid the growth of the market. However, smart cities market size in Asia-Pacific is expected to witness significant growth during the forecast period, owing to various government initiatives and digital transformation trends within the region, which is expected to fuel the smart cities market growth in this region.
By Region
Asia-Pacific would exhibit the highest CAGR of 28.7% during 2021-2030.
For instance, on November 18, 2024 , L&T Technology Services Limited (LTTS) announced a strategic collaboration with the Colorado Smart Cities Alliance (CSCA) to advance smart city projects in Colorado. The partnership aimed to integrate LTTS’s engineering expertise with CSCA’s urban development initiatives. The collaboration focused on smart transportation, intelligent infrastructure, energy management, and data-driven city services, leveraging LTTS’s experience in IoT offerings for city operations, surveillance, and security systems.
The report focuses on growth prospects, restraints, and analysis of the global smart cities market trends. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the global smart cities market research.
Technology Insights:
The smart cities market is expected to witness significant growth, driven by several key trends. One of the prominent trends is the integration of technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), big data, and 5G connectivity, which help cities optimize resources and services. IoT plays a foundational role by embedding sensors and devices in urban infrastructure, enabling real-time data collection. This data allows cities to improve various systems, from traffic management to waste disposal. For instance, smart traffic systems can adjust signals based on traffic flow, and smart waste management systems can optimize collection routes, reducing congestion and waste.
In addition, AI and machine learning play a essential role in handling the vast amounts of data produced by IoT devices. These technologies assist cities in forecasting trends, improving decision-making, and offering more tailored services. Systems powered by AI enhance public transportation routes according to real-time traffic information or oversee air quality to ensure compliance with environmental regulations. Furthermore, AI contributes to public safety through surveillance systems capable of detecting unusual activities or imminent threats. In addition, the surge in use of big data analytics further enhances smart cities technologies & solutions by integrating information from various sources, allowing city planners to refine infrastructure and services based on the patterns and trends observed in the data. This leads to more effective energy management, reduced waste, and improved urban planning.
For instance, on November 5, 2024, Barcelona, a leader in smart city innovation, hosted projects using advanced AI, edge computing, and data management to streamline operations. Lenovo's innovations, Lenovo VINA and edge guarding, set new standards for smart city applications with NVIDIA AI Enterprise software. These tools offered transformative solutions for urban environments. Announced ahead of the Smart City Expo World Congress, NVIDIA AI Blueprint for video search and summarization enabled AI agents to analyze visual data and produce answers. These innovations were applicable in traffic management, parking, curbside management, and public safety.
The deployment of 5G networks for smart cities provides the high-speed, low-latency connectivity necessary for real-time communication between billions of devices. This infrastructure supports advancements like self-driving cars and intelligent healthcare systems, leading to more efficient urban mobility and enhanced public service delivery. In addtion, 5G enables the integration of augmented reality (AR) and virtual reality (VR) technologies that improve how residents engage with their surroundings, such as visualizing city projects or navigating in real time.
Energy efficiency is a major focus in smart cities, where smart grids uses IoT sensors and AI to enhance power distribution, anticipate energy demand, and incorporate renewable energy sources. Developing electric vehicle (EV) infrastructure with more advanced charging systems and promoting shared mobility options such as bike-sharing and ride-hailing are also contributing to decreased congestion and a reduced carbon footprint in urban transport. These advancements are expected to drive the smart cities market growth.
Segment Review:
The global smart cities market is segmented into component, functional area, and region. Based on component, the market is divided into hardware, software, and service. Depending on the functional area, the market is fragmented into smart infrastructure, smart governance and smart education, smart energy, smart mobility, smart healthcare, smart buildings, and others. Region wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The global smart cities market is dominated by key players such as AT&T Intellectual Property, Cisco Systems, Inc., Ericsson, General Electric, Hitachi, Ltd, Huawei Technologies Co. Ltd., IBM Corporation, Intel Corporation, Microsoft Corporation, and Schneider Electric. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
By Functional Area
Smart infrastructure segment is projected as one of the most lucrative segment.
Top Impacting Factors:
Government Smart City Initiatives
Globally, governments have been playing a major role in the smart cities marketplace through their regulations and initiatives focused on the deployment of smart services as a major part of their infrastructure. For instance, General Services Administration’s (GSA) Smart Buildings initiative, started in May 2012, was aimed to reduce costs and promote smart services with modernized federal government buildings in large part through connected technologies. Similarly, the European smart city industry is expected to grow at a significant rate due to its focus on energy and climate objectives. Therefore, the government is focused on the distribution of energy with efficient models and strategies for progressing toward a low carbon future in this region.
Moreover, governments in emerging economies such as China, South Korea, Dubai, India, Singapore, and Japan, are aimed for the smart development of their economies. Further, China has announced 500 digital cities pilot projects, which is again a huge investment by the government in the region. Moreover, Dubai’s goal to achieve the objective of the Smart Dubai Plan 2021 for transforming their country into a 100% paperless government has fueled the adoption of smart services in the country that drives the growth of the smart city market size.
Rise In Need of Better Natural Resource Management
The global population has urbanized and increased at a rapid pace. According to a research, it is estimated that around two-third of the world population is expected to live in cities or urban centers by 2050, which is anticipated to be a major factor leading to resource scarcity in the upcoming years. Moreover, as cities drive the economic growth in most of the countries, urbanization is projected to surge further in the near future. To cope with rise in urbanization and climate change issues, innovation & digital technology must be leveraged to minimize energy consumption and improve quality of life.
In addition, innovation must be combined with energy, digital technology, and information & communications technology to address urbanization challenges and ensure sustainability, which is expected to drive the growth of the smart cities market in near future. Furthermore, solar energy needs to be encouraged. The government has started taking initiative for adoption of solar energy. However, use of gas along with solar and wind energy is less than 2% at present, which is very crucial.
Regional Insights:
North America: North America, particularly the United States and Canada, leads the smart cities market due to substantial investments in infrastructure modernization, sustainability initiatives, and technological advancements. Cities like New York, San Francisco, and Toronto are deploying smart technologies to improve urban services such as transportation, energy management, and public safety. Government policies and funding support, combined with a strong presence of technology firms and innovators, drive the growth in this region. Integration of IoT, AI, and data analytics is prominent, enhancing the efficiency and quality of urban living.
Europe: Europe smart cities market is characterized by a strong emphasis on sustainability and energy efficiency. Countries like Germany, the Netherlands, and the UK are investing heavily in smart infrastructure projects to address environmental challenges and enhance the quality of urban life. The European Union's Green Deal and various funding programs are accelerating the development and deployment of smart technologies. Key areas of focus include smart grids, smart transportation systems, and intelligent public services, with cities like Amsterdam and Copenhagen serving as leading examples.
Asia-Pacific: The Asia-Pacific smart cities market is experiencing rapid growth in the smart cities industry, driven by urbanization, population growth, and economic development. Cities like Shanghai, Tokyo, and Singapore are at the forefront, implementing smart solutions to tackle challenges related to urban congestion, resource management, and public safety. Investments in smart infrastructure, including smart grids, intelligent transport systems, and data analytics, are rising. Governments and private sector players are actively pursuing smart city projects to improve urban living conditions and economic competitiveness.
For instance, on August 28, 2024, India’s Cabinet Committee on Economic Affairs (CCEA), led by Prime Minister Narendra Modi, approved 12 new smart city projects under the National Industrial Corridor Development Programme (NICDP) with an investment of INR 286.02 billion (US$3.41 billion). These projects were expected to attract INR 1.52 trillion (US$18.12 billion) in investments from large industries and MSMEs, creating 1 million direct and 3 million indirect jobs.
Latin America: Latin America smart cities market is anticipated to witness considerable growth, as cities focus on improving infrastructure, enhancing public services, and addressing urban challenges. Countries like Brazil, Mexico, and Chile are leading efforts to deploy smart technologies in areas such as transportation, waste management, and energy efficiency. Public-private partnerships are crucial in this region, as they drive investment and facilitate the implementation of smart city initiatives. Cities such as São Paulo and Mexico City are adopting smart solutions to enhance urban living and operational efficiency.
Middle East & Africa: The smart cities market in the Middle East and Africa is growing steadily, driven by urbanization, economic diversification, and technological advancements. Countries like the UAE, Saudi Arabia, and South Africa are investing in smart infrastructure to support rapid urban growth and enhance quality of life. Key projects include smart transportation systems, energy-efficient buildings, and advanced public safety solutions. The focus is on creating sustainable and resilient urban environments, with cities like Dubai and Johannesburg leading the way in implementing smart city technologies.
Key Industry Developments:
March 2024: IBM announced the launch of its smart cities IoT platform, designed to improve urban infrastructure management through real-time data analytics and AI. This platform aims to enhance city services such as traffic management, energy distribution, and public safety in cities across North America and Europe.
June 2024: Cisco revealed its new Smart City solution focusing on enhancing public safety and urban mobility. The solution integrates IoT sensors with Cisco’s networking technology to provide cities like London and Paris with advanced analytics and real-time monitoring capabilities.
August 2024: Siemens deployed a smart grid solution in Singapore, which includes advanced metering infrastructure and energy management systems. This project aims to optimize energy distribution and support the city’s sustainability goals by improving energy efficiency and reducing carbon emissions.
September 2024: Schneider Electric introduced its EcoStruxure Smart City platform in Dubai, featuring solutions for energy management, smart buildings, and infrastructure monitoring. This platform is designed to support Dubai’s vision of becoming a global leader in smart city technology.
October 2024: Hitachi launched a smart transportation initiative in Tokyo, integrating AI and IoT technologies to enhance traffic flow and public transit efficiency. This project aims to address urban congestion and improve overall transportation infrastructure in the city..
Technological Capabilities:
Technological capabilities are interconnected and work together to create an integrated and efficient urban environment in smart cities. In addition, smart cities technologies & smart city solutions leverage sensors and monitoring systems to collect data on air quality, water management, waste management, and environmental conditions. These technological enhancements help in monitoring pollution levels, identifying environmental risks, and implementing sustainable practices. Moreover, technological developments such as AI and ML technologies are utilized in smart cities to automate processes, optimize resource allocation, and enhance decision-making. These technologies are expected to be applied in various areas, including traffic management, predictive maintenance of infrastructure, energy optimization, and public safety. AI-powered systems are anticipated to analyze complex data patterns, predict outcomes, and enable autonomous decision-making in real time.
Furthermore, in smart cities, IoT is used to gather and analyze real-time data from sensors embedded in infrastructure, buildings, transportation systems, and other objects. For instance, in January 2021, Cisco enhanced its smart city services and partnered with cities, communities and governments around the world to reimagine their future to be inclusive, sustainable and securely connected. Such strategies to enhance technological capabilities in market to fuel the smart cities market growth.
Government Regulation:
It becomes essential to establish appropriate government regulations to ensure the effective and ethical deployment of technologies as the development of smart cities progresses. Hence, smart cities employ digital platforms and e-government solutions to streamline administrative processes, provide online services, and enhance citizen engagement. This is expected to include online portals for accessing government services, digital payment systems, open data initiatives, and platforms for citizen participation and feedback.
Moreover, enforcing government regulations to ensure the ethical use of technologies in smart cities involves guidelines for the responsible use of artificial intelligence (AI), facial recognition, and other advanced technologies, with a focus on preventing discriminatory practices and protecting civil liberties.For instance, in September 2021, Dubai government launched over 100 smart initiatives and 1,000 smart services to boost seamlessness and sustainability and transform the way government services are delivered to citizens thereby increasing their happiness quotient. As a result, due to its landmark efforts, Dubai has recently been recognized as a role model for smart, sustainable and resilient city by the UN.
Key Benefits for Stakeholders:
- The study provides an in-depth analysis of the global smart cities market forecast along with current & future trends to explain the imminent investment pockets.
- Information about key drivers, restraints, & smart cities mrket opportunities and their impact analysis on global smart cities market trends is provided in the report.
- Porter’s five forces smart cities market analysis illustrates the potency of the buyers and suppliers operating in the industry.
- The quantitative analysis of the smart cities market from 2021 to 2030 is provided to determine the market potential.
- The current smart cities market forecast is quantitatively analyzed from 2021 to 2031 to benchmark the financial competency.
- The report includes the smart cities market share of key vendors and restaurant management smart cities market trends.
Smart Cities Market Report Highlights
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Analyst Review
The demand for smart cities has grown over the past few decades as smart cities enable governments to deploy more sustainable and green infrastructure. A smart city is fundamentally a network made up of IoT, cloud computing, and artificial intelligence solutions that helps collect, manage, and analyze data from citizen and city resources in order to assist cities in becoming more efficient and responsive to its inhabitants. Smart city solutions offer a wide range of possible applications, such as smart IoT-enabled traffic management systems that minimize traffic congestion & accidents and AI-Powered smart energy grids that can save energy and allow greater use of renewable energy. Such feature sets of smart cities have promoted the growth of the global smart cities market.
Key providers in the smart cities market are Hitachi, Ltd, Huawei Technologies Co. Ltd., and IBM Corporation. With growth in demand for smart cities, various companies have established partnerships to increase their smart city solutions offerings. For instance, in June 2020, Huawei Technologies, the Chinese technology corporation, collaborated with Smart City Solutions Company (SC2), a leading service provider for the Saudi Arabian region, to support local smart city initiatives such as the National Transformation Plan 2020 and Saudi Vision 2030. Such collaboration has empowered the smart city programs of the region. Moreover, the involvement of big industry players of the smart city industry in government and public initiatives is expected to further aid the demand in the smart city market.
In addition, with surge in demand for smart cities, various companies have expanded their current services to continue with the rise in demand for smart city solutions. For instance, in July 2021, Japanese multinational conglomerate, Hitachi, Ltd announced the launch of its specialized IoT platform for smart buildings. Such products bring high added value for smart city infrastructures and help infrastructures to be more highly efficient and easily operable.
Moreover, many market players have expanded their business operations and customer base by increasing their acquisitions. For instance, in November 2021, Swedish multinational networking and telecommunications company, Ericsson, announced the acquisition of an American cloud communications service provider, Vonage Holdings Corp. Such acquisitions are expected to aid Ericsson’s cloud and IoT offerings, which further support the growth of smart city solutions that are highly dependent on IoT and cloud communication services.
The global smart cities market size was valued at USD 648.36 billion in 2020, and is projected to reach USD 6,061.00 billion by 2030
The global smart cities market is projected to grow at a compound annual growth rate of 25.2% from 2021-2030 to reach USD 6,061.00 billion by 2030
The key players profiled in the reports includes AT&T Intellectual Property, Cisco Systems, Inc., Ericsson, General Electric, Hitachi, Ltd, Huawei Technologies Co. Ltd., IBM Corporation, Intel Corporation, Microsoft Corporation, Schneider Electric
Region wise, the smart cities market was dominated by North America in 2020 and is expected to retain its position during the forecast period
The surge in adoption of smart cities in multiple regions is driven by various government digital cites initiatives and rise in the need for better natural resource management in urban environments. In addition, the growth in need for public safety and security fuel the growth of the smart cities market.
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