The smart cities market is expected to grow at a CAGR of 22.9% from 2019 to reach $545.7bn by 2027, according to market watcher Meticulous Research.
 
Various factors such as government initiatives for overpopulation and urbanisation management, growing requirement of resource management for sustainable development, emergence of AI, IoT and their market applications are expected to boost the market for smart cities across the globe.
 
However, significant initial investment requirements and rising cases of data theft obstruct the growth of this market to some extent. Also, reluctance shown by citizens to adopt new technologies and rising cases of data abuse by large corporations are the major challenges.
 
Managing the ever-increasing urban population is one of the most pressing issues for governments around the world. Today, more than four billion people, or more than half of the global population, lives in cities. According to the UN, by 2030 there will be 43 megacities in the world with developing regions such as the Middle East, Asia and Africa leading the table. Cities such as New Delhi, Tokyo (pictured), Shanghai, Dhaka, Cairo, Beijing and Mumbai will be the most populous cities of the world, each with a population of more than 25 million.
 
With a growing urban population, government and private sector organisations across the world are working tirelessly towards innovations for systematic and sustainable growth of the cities. City authorities are seeking ways to elevate the standard of living by providing a healthy environment and ensuring better management of valuable resources such as energy and water.
 
Smart communication technologies such as ICT, IoT, AI and big data are being applied to reduce crime rate, facilitate seamless transportation and healthcare management. These technologies can provide real-time data on the situation and alert the concerned authorities accordingly. Smart cities are being implemented by governments of developing as well as developed countries around the world using IoT, AI and ICT concepts extensively for creating self-sustaining and self-healing cities.
 
Recently, many cities across the globe have upgraded their infrastructure, using sensors, data analytics and automatic access control to manage urban resources such as public transit, wastewater systems and roads. Regulatory bodies can analyse usage data in real time to optimise energy usage or the number of rubbish pickups required in a week.
 
Citizens can also use these data via a point of contact app in their smart phones or other monitoring devices to optimise their daily needs and access real-time traffic information, while service providers can use this information to offer better consumer services.
 
On the basis of application, utilities dominated the overall smart cities market in 2019 and are estimated to continue their dominance over the forecast period. Smart utilities help in achieving optimised asset performance and improved operational efficiency using real-time business intelligence, and leveraging smart grid and intelligence to identify key insights into customers’ utility usage patterns.
 
The smart cities market is mainly segmented into hardware, software and services. The hardware segment held the largest share of the overall market in 2019, owing to the very early phase of implementation across major parts of the globe.
 
North America accounted for the largest share of the global smart cities market in 2019, followed by Europe and Asia-Pacific. Driving forces include the fast-developing communication infrastructure, stringent measures for public safety and data privacy, efforts to reduce carbon footprints using ICT technologies, and prioritising the development of smart cities by many local and national government authorities.
 
Asia-Pacific is projected to grow at the highest CAGR during the forecast period. This growth is mainly attributed to the infrastructural development activities in south-east Asian countries as well as gradually rising technology adoption rate in countries such as India, Taiwan, South Korea, Australia and New Zealand.
 
Some of the key players operating in the global smart cities market are Cisco, Huawei, IBM, Atos, Foxconn, Bosch, General Electric, Siemens, L&T Infotech, Cognizant, Cap Gemini, Schneider Electric, Intel, Qualcomm and Fujitsu.