Smart City Market - Global Industry Analysis

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The smart city is an urban area that uses technology for the efficient management of its resources. The smart city provides a systematic lifestyle ensuring that it fulfills the needs of citizens with respect to economic, social, and environmental aspects. 

Usage of advanced technology in the construction sector is preliminarily driving the smart city market. This has led to significant growth in the construction sector. The global construction sector was valued at USD 8.8 trillion in 2016 as compared to USD 7.9 trillion in 2012. Countries such as the U.S., China, India, and Japan contributed almost 40% to the rise of the construction sector. Major factors contributing to this growth are increasing adoption of technology in various processes. 

The government of various nations such as the U.S., Canada, China, and India is providing tax incentives to endorse construction of green buildings. The U.S. government provides a 30% tax credit for investors and project owners for the installation of designated renewable-energy equipment. Canada has regional incentive provisions such as the city of Hamilton’s property tax benefits of up to 75% to construct a new green building. Thus, the construction sector will contribute significantly to the growth of the smart city market during the forecast period.

The smart city concept provides solutions to optimize traffic conditions in a holistic manner and offers faster transportation options. The global automotive industry is growing at a rapid pace. About 86 million cars were sold in 2017 as compared to   84 million in 2016. This number is projected to grow due to the increasing demand in the Asia Pacific. Developing countries with the high population such as China and India were major contributors. Rising number of vehicles developed a need for optimization in traffic conditions, boosting the evolution of smart cities. Hence, the governments of the countries have opted to invest heavily in their smart city projects with a focus on smart transportation. Thus, the global smart city market is expected to propel during the forecast time frame. On a contrary, securing data collected from various components and controlled by numerous government organizations is a major hurdle for the smart city market. However, advancements in technology to have smart city operation centers may open new avenues for the market in the near future.

Based on the application area, the global smart city market is fragmented into transportation, construction, power management, water & waste management, healthcare, and others. The transportation segment is expected to hold a significant market share during the projected timeframe. Hardware, software, and service are the component segment for the smart city market. Software segment is projected to grow at a substantial rate during the forecast period.

North America holds a substantial share in global smart city market and is expected to continue its dominance in the near future. Increasing usage of technology in the construction sector along with the rapid advancements in transportation division are the major drivers for the market in this region. Further, the presence of significant market players in the region is projected to foster the smart city market. Supporting government initiatives are the major driving factor for the growth of smart city market in the Asia Pacific. The Asia Pacific is projected to grow at a significant rate during the estimated timeframe.

Some of the key players in the smart city market are Honeywell International Inc., ABB Group, General Electric Company, Cisco Systems Inc., Siemens AG, SAP SE, Schneider Electric SE, Microsoft Corporation, IBM Corporation, and Alstom SA, among others. Most of the companies are concentrating on upgrading their products and solutions in accordance with the advanced technology.