During the projected period, the size of the global Smart Cities Market will increase from $1125 billion in 2021 to $6050 billion in 2028, at a Compound Annual Growth Rate (CAGR) of 26%. In this report, we will cover the full overview, growth drivers, and opportunities of the market from 2022- 2028
The global smart city market was worth around $1125 billion in 2021 and is predicted to grow to around $6050 billion by 2028 at a CAGR rate of over 26% over the forecast period. In this report, we will cover the full overview, growth drivers, opportunities, and obstacles of the smart city market from 2022 -to 2028
The smart city is a modern zone that leverages different sensors to automate actions. It is a concept that works with the integration of information and communication technology combined with several physical devices connected to the Internet of Things networks to ease the operations and services of a particular field.
It basically gathers data from across the city to activate data-driven validations, traffic safety, and swift responsive models. Multiple fields can be configured with smart city sensors for execution and the security system is intact and perfect to the core. Applications such as gunshot detection, smart surveillance, home security systems, and law enforcement protocols can also be pre-configured into the system to automate its execution.
Smart living as an option has been gaining traction in recent times. It eases and automates people’s lives in many different dimensions and completely reduces man's efforts to a large extent. It uses all advanced technology combined with artificial intelligence, the Internet of Things (IoT), big data, data analytics, and cloud storage technologies.
Every minute actions and responses are integrated into the system linking through various domains digitally. It is completely automated and once the execution starts, every different channel of domains coordinates and completes the action giving the response without any additional configuration from the users.
The outbreak of Covid-19 had a neutral effect on the global smart city market. Various countries had strict lockdowns, curfews, and travel bans reducing the manpower effects to the minimum. Many high-profile software companies were shut down with their operations coming to closure. This affected the need for smart city applications with lesser strategic management and the Government’s abandonment of innovation plans in that arena. This affected the growth of the market while the reliability of those industries turned towards technologies like AI and IoT to overcome the pressures of pandemics. E-health and e-government service applications were used extensively for the lack of real services and online education became the norm. This in turn increased the values of the smart city market to a large extent.
The increasing awareness and focus on a healthy environment with minimal energy consumption drives market growth rapidly. There is also an extra concern over the proliferation of environmentally disposable wastes and eventual global warming which drives increased leverage of digital applications that indirectly augments growth for the global market.
The implementation of smart systems and automation mechanisms reduces power consumption along with lowering carbon emission and optimizing operations which increases the leverage and demand for digital products. Rapid urbanization and the rising need for sustainable infrastructures contribute to the growth of the market excessively. The smart city initiatives in the field of utility management, mobility, and safety are helping to ease people’s lives and their efforts in multiple ways which spike up its demand. Moreover, government initiatives including funding & financing models, infrastructure development, and improving governance systems fuel the growth of the smart city market.
The leverage of new technologies like nanotechnology, artificial intelligence, machine learning, IoT, cloud computing, cognitive computing, big data analytics, and open data are the growth drivers of the global market. In addition, increasing focus on the need for public safety and security also drives growth. Apart from all this, the smart energy segment is amplifying its leverage and has gained a lot of traction with IoT-powered applications that augment market growth globally.
Security concerns coupled with a lack of funding & adequate infrastructure limit the growth of this market.
Developing nations on a tight budget cannot afford smart city solutions due to the expense they would incur. This factor impedes market growth to some extent. Apart from this, these kinds of digital platforms are prone to security violations and data thefts which also restricts the global smart city market growth considerably.
The emergence of 5G coupled with AI and IoT provides excellent opportunities for the market
The emergence of AI in smart city solutions coupled with IoT market and augmented reality mechanisms provide numerous lucrative opportunities for market expansion. The different public-private partnerships principles such as Organizational Behavior Management (OBM), Build, Own Operate (BOO), Build-Operate-Transfer (BOT), and BOM have been validated through smart city solutions which provide rampant opportunity. Moreover, the emergence of 5G has enabled smooth communication and faster data reach through smart city systems which induce a great opportunity for market growth further.
Lack of awareness and knowledge about smart city solutions poses a challenge to the market
Smart city solutions are still emerging in many developing countries and hence very small part of the world population is aware of this. This decelerates the market growth to a considerable extent by bringing down the force of the government to implement any smart solutions in the aid of the people. This ignorance about smart city solutions is a big challenge for the growth of the market globally.
High cost of funding and financing infrastructures to implement smart city solutions is a challenge for the market
Many developing nations are lagging behind in the effective leverage of smart city solutions because of the lack of infrastructure and poor funding initiatives from the government. The infrastructures and facilities to use smart city solutions come at a higher expense which poses a challenge to the market.
The global smart city market in this research analysis is divided into components, application areas, and regions. The component is classified by hardware, software, and services. The application area is divided based on infrastructure, smart governance, smart education, transportation, construction, power management, water & waste management, healthcare, and others.
In October 2021, Hitachi with Bao Viet Insurance brought innovations in the insurance business using AI and medical big data.
In February 2020, Cisco and Connexin with Quantela to launch smart cities in the UK with IoT based applications.
|Historic Years||2016 - 2020|
|Forecast Years||2021 - 2028|
|Segments Covered||By Product Type, By Application, and By End Use|
|Forecast Units||Value (USD Billion), and Volume (Units)|
|Quantitative Units||Revenue in USD million/billion and CAGR from 2021 to 2028|
|Regions Covered||North America, Europe, Asia Pacific, Latin America, and Middle East & Africa, and Rest of World|
|Countries Covered||U.S., Canada, Mexico, U.K., Germany, France, Italy, Spain, China, India, Japan, South Korea, Brazil, Argentina, GCC Countries, and South Africa, among others|
|Number of Companies Covered||10 companies with scope for including additional 15 companies upon request|
|Report Coverage||Market growth drivers, restraints, opportunities, Porter’s five forces analysis, PEST analysis, value chain analysis, regulatory landscape, market attractiveness analysis by segments and region, company market share analysis, and COVID-19 impact analysis.|
|Customization Scope||Avail customized purchase options to meet your exact research needs.|
North America dominates the market as the highest revenue-sharer and consumer
North America leads as the highest revenue-sharer of the global smart city market. Verticals such as telecom, retail, and banking have undergone a digital transformation which triggers market growth in this region. The well-developed ICT infrastructure, budding start-ups, and presence of prominent technology vendors are factors driving growth in this region. Asia-Pacific is expected to become the second-largest fast-growing market due to increased focus on the development of digital infrastructure here. Rampant urbanization along with increasing disposable income are expected to propel the market here in the future. Organizations in this region are largely focusing on cloud-based benefits which trigger massive leverage of smart transportation, smart governance, smart building, etc.
The key players in the global smart city market are Siemens, Cisco, Hitachi, IBM, Microsoft, Schneider Electric, Intel, NEC, ABB, AGT International, AVEVA Group plc, Ericsson, Honeywell International Inc, Itron Inc, KAPSCH Group, Microsoft Corporation, Huawei Technologies co. ltd., Oracle Corporation, Osram GmbH, SAP SE, Siemens AG, Telensa, Verizon, and Vodafone Group plc.
Global smart city market segmentation follows
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.
The increasing awareness and focus on a healthy environment with minimal energy consumption drives market growth rapidly. There is also an extra concern over the proliferation of environmental disposable wastes and eventual global warming which drives increased leverage of digital applications that indirectly augments growth for the global market.
According to the report by Zion Market Research, The global smart city market was worth around $630 billion in 2021 and is predicted to grow to around $6050 billion by 2028 at a CAGR rate of over 26% over the forecast period
North America leads as the highest revenue-sharer of the global smart city market. verticals such as telecom, retail, and banking have undergone a digital transformation which triggers market growth in this region.
The key players in the global smart city market are Siemens, Cisco, Hitachi, IBM, Microsoft, Schneider Electric, Intel, NEC, ABB, AGT International, AVEVA Group plc, Ericsson, Honeywell International Inc, Itron Inc, KAPSCH Group, Microsoft Corporation, Huawei Technologies co. ltd., Oracle Corporation, Osram GmbH, SAP SE, Siemens AG, Telensa, Verizon, and Vodafone Group plc