The global smart cities market size was valued at USD 748.7 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 25.8% from 2023 to 2030. 

The increasing urbanization, the need for efficient management of resource utilization, public safety concerns, and increasing demand for an environment with efficient energy utilization are the major driving factors for the market growth. Due to the COVID-19 pandemic, countries followed strict lockdowns and mobility constraints to avoid the spread of the virus. During the pandemic, the dependence of global economies on urban areas and the importance of public healthcare in smart city initiatives have been brought to light. However, organizations are trying to implement emerging technologies such as the Internet of Things (IoT) and Artificial Intelligence (A.I.) to overcome the challenges faced during the pandemic.

Gather more insights about the market drivers, restrains and growth of the Smart Cities Market

The need for sustainable structure due to the growing population and urbanization has become significant for market growth. Several regional governments are trying to handle these problems via smart city initiatives across serviceable segments, such as mobility, utility, safety, and management. The local governments have also been at the forefront of stimulating organizational and institutional changes, enabling steady investments, and creating a consortium for bringing diverse businesses together. The emergence of a new genre of public-private partnerships is also a particular development attributable to the smart city’s developments. Further, infrastructure development financing and funding models and governance systems are playing a major role in fueling the market.

The smart cities market growth can be attributed to the growing adoption of nanotechnology, Artificial Learning (A.I.), Machine Learning (ML), cloud computing, IoT, cognitive computing, big data analytics, and open data. Moreover, the increasing implementation of Build-Own-Operate (B.O.O.), Build-Operate-Transfer (B.O.T.), Original Brand Manufacturer (O.B.M.), and Bill of Material (B.O.M.) business models is also driving the successful project execution of smart cities. Asian countries have been pursuing numerous initiatives to encourage the adoption of digital technologies for smart cities while seeking to maintain consumer data privacy. Moreover, several government initiatives worldwide are anticipated to drive market growth further.

Though smart city projects need a diverse set of technologies, such as IoT, A.I., and smart sensors, to monitor city infrastructure, their application varies across projects and from city to city. The key driving factors for implementing smart city solutions are the need to improve resilient cities, reduce energy, and concern over the increase of environmental waste. Additionally, the vendors invest in Research & Development (R&D) to establish new systems and technologies for connected infrastructure across smart city projects. The key players in the market, such as Cisco Systems, Siemens AG, and IBM Corporation, are actively investing in R&D activities related to connected infrastructure in smart city development worldwide.

The smart cities concept has been gaining traction in recent years owing to numerous novel advantages smart cities can provide. However, several barriers are affecting the growth of the market. The high initial costs that are the prerequisite for the upheaval of the existing infrastructure of cities may restrain the growth of the market. The sheer number of financial commitments needed for the projects has been an important factor in slowing down market developments. However, the current scenario is expected to change in the coming years as there have been many other investment techniques that are gaining popularity, such as Build Transfer (B.T.), Build Operate Transfer (B.O.T.), Build Own Operate (B.O.O.), and public-private partnerships.

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Smart Cities Market Segmentation

Grand View Research has segmented the global smart cities market report based on application, smart governance, smart utilities, smart transportation, smart healthcare, and region.

Application Outlook (Revenue, USD Billion, 2018 - 2030)

• Smart Governance

• Smart Building

• Environmental Solution

• Smart Utilities

• Smart Transportation

• Smart Healthcare

• Smart Public Safety

• Smart Security

• Smart Education

Smart Governance Outlook (Revenue, USD Billion, 2018 - 2030)

• City Surveillance

• C.C.S.

• E-governance

• Smart Lighting

• Smart Infrastructure

Smart Utilities Outlook (Revenue, USD Billion, 2018 - 2030)

• Energy Management

• Water Management

• Waste Management

• Meter Data Management

• Distribution Management System

• Substation Automation

• Other Smart Utilities Solutions

Smart Transportation Outlook (Revenue, USD Billion, 2018 - 2030)

• Intelligent Transportation System

• Parking Management

• Smart Ticketing & Travel Assistance

• Traffic Management

• Passenger Information

• Connected Logistics

• Other Smart Transportation Solutions

Smart Cities Smart Healthcare Outlook (Revenue, USD Billion, 2018 - 2030)

• Medical Devices

• Systems & Software

Regional Outlook (Revenue, USD Billion, 2018 - 2030)

• North America

• Europe

• Asia Pacific

• Latin America

• Middle East and Africa (MEA)

Key Smart Cities Company Insights

Some of the key players operating in the market include Microsoft Corporation, and Oracle Corporation.

• Microsoft Corporation provides business software and solutions. The well-known software products from Microsoft are the Microsoft 365 series of productivity programs, Windows series of operating systems, and the Edge browser. Its flagship hardware products are Xbox video game consoles and Microsoft Surface touchscreen computers.

• Oracle Corporation is a provider of IT software and services. The company sells database software and technology, cloud engineered systems, and enterprise software products, such as, human capital management software, enterprise resource planning software, supply chain management software, enterprise performance management software, and customer relationship management software.

• Ericsson, and Telensa are some of the emerging market participants in the smart cities market.

• Ericsson develops the IT products and services for the telecommunications industry and is currently leading the way in 5G. The company sells infrastructure, software and services in the field of information and communication technology for mobile service providers and enterprises, including 3G, 4G and 5G equipment, Internet Protocol (IP) and optical transport systems.

• Telensa offers simple and effective smart lighting solutions for public and district lighting to help cities, utilities and large areas manage their lighting to save money and reduce costs.

Key Smart Cities Companies:

• ABB Limited

• AGT International

• AVEVA Group plc.

• Cisco Systems, Inc.

• Ericsson

• General Electric

• Honeywell International Inc.

• International Business Machines Corporation

• Itron Inc.

• KAPSCH Group

• Huawei Technologies Co., Ltd.

• Microsoft Corporation

Recent Developments

• In December 2023, Msheireb Properties (MP), Qatar based property developer, signed a Memorandum of Understanding (MoU) with Microsoft Corporation, software products developer, to develop a ‘Smart Experience’ project for visitors, retail, residents, and commercial customers in MP’s development, Msheireb Downtown Doha (MDD).The Smart Experience project is revolutionizing the way citizens interact with the urban environment by incorporating new solutions to improve the lives of MDD members.

• In November 2023, Smart City Expo World Congress (SCEWC), the international event on cities and smart urban solutions organized by Fira de Barcelona. It is an exhibition of innovative urban solutions and projects that focus on ways to transform modern cities into more sustainable, efficient and habitable places. The congress program of SCEWC comprises eight main themes, including energy and environment, enabling technologies, mobility, housing and inclusion, management and economy, security and blue economy, and infrastructure and buildings.

• In August 2023, NEC Corporation India, IT services provider, launched Smart City project in Tirupati, India, for Tirupati Smart City Corporation Limited.Under this project, NEC Corporation India would implement ICT solutions across the city and establish a City Operations Center (COC) in Tirupati. ICT solutions, such as, a unified command and control center, and integrated services enable real-time data collection and analysis and two-way communication, helping to provide more effective responses to environmental, and health safety.

• In March 2023, Honeywell International announced the initiation of the first phase of the Bangalore Safe City Project. The initiative seeks to establish a secure, efficient, and empowering environment for girls and women by leveraging advanced safety and security technology. As part of the project, Honeywell plans to deploy over 7,000 video cameras at strategic locations throughout Bengaluru, equipped with cutting-edge artificial intelligence (AI) capabilities. These AI-powered video analytics systems will enable comprehensive analysis of video feeds spanning the city, contributing to enhanced safety and surveillance measures.

• March 2023, Siemens, a smart infrastructure provider, announced the launch of a smart IoT solution called Connect Box to manage smart buildings. Connect Box offers a user-friendly approach for monitoring building performances, helps optimize energy, and substantially improves the air quality inside small to medium buildings such as retail shops, schools, apartments, and small offices in smart city projects. Therefore, The increasing implementation of IoT in smart cities market is expected to drive the market growth.

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