The global smart cities market size was valued at USD 771.21 billion in 2021. It is projected to reach USD 5,829.24 billion by 2030, growing at a CAGR of 25.20% during the forecast period (2022-2030). A smart city is an urban region that uses emerging technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), big data, cloud storage technology, and data analytics to collect and analyze utilization data and use insights gained from them to manage assets, resources, and services efficiently. The growth in the smart cities market is majorly propelled by growing government initiatives for overpopulation and urbanization management and the growing requirement for resource management for sustainable development.
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Rising adoption of Artificial Intelligence and IoT
The global expansion of smart cities is fueled by the rising use of artificial intelligence (AI) and the internet of things (IoT). IoT is used for various purposes, including industrial, public safety, emergency services, public transportation, municipal lighting, and innovative city applications. The IoT's wireless communications are becoming more popular among municipalities since they are less expensive, more efficient, and use fewer resources. IoT sensors are used in Las Vegas to manage its environmental problems and traffic congestion. The government is also investing in smart and adaptive streetlights to increase energy efficiency.
For instance, Chicago has started a smart lighting initiative with a four-year installation goal of 270,000 LED lights. The city installed 81,000 LED lights during the first year of this project. Chicago predicts that annual utility cost savings would be in the neighborhood of USD 10 million. These factors are anticipated the drive market growth during the forecast period.
Rapidly Growing Urban Population
The provision of a sustainable environment is one of the essential features of smart cities. It is crucial to monitor environmental indicators because of the rising industrialization and urbanization trends. Smart city platforms play a pivotal part, and their contributions are expected to boost the market's development over the forecast period. Globally, smart cities are expanding due to the quickening pace of urbanization. The United Nations estimates that by 2050, there will be an additional 212 million urban residents in India (404 million), China (292 million), and Nigeria (29 million). Latin America, a developing region, has the world's most significant rate of urbanization.
High Cost of Implementation
Economies with a tight budget cannot implement smart city solutions due to the cost of deploying these systems. Integrating primary functions such as big data analytics involves the significant design, coding, testing, and documentation tasks. The cost incurred in transforming the existing infrastructure prevents governments from continuing large-scale investments. Smarter infrastructure can reduce running expenses and boost energy efficiency, but the upfront investment is hampering the market growth.
Growth of Smart Education
Smart education is one of the critical ingredients in innovative city development. Compared to traditional classroom teaching models, smart education is an interactive, collaborative and visual model designed to increase student engagement and enable teachers to adapt to students' skills, interests, and learning preferences. The new-age schools and education system in Smart Cities would possess software-mediated, highly coded, and data-driven infrastructure, where students would learn through digital media. Digital education will also motivate students to contribute to the improvement of society and the environment.
Moreover, ed-tech companies attempt to bridge the gap between their products and the millions of students who stand to profit from them by developing effective instructional software. The Office of Innovation initiated one such attempt to close this gap at the New York City Department of Education, which created an educational innovation zone, or iZone. At least six states and 300 schools became a part of this program. These factors are anticipated to create new opportunities for market growth.
The global smart cities market is segmented by solution.
Based on the solution, the global smart cities market is bifurcated into smart mobility management, smart public safety, smart healthcare, smart building, smart utilities, smart security, smart education, and others.
The smart education segment is the highest contributor to the market and is expected to grow at a CAGR of 23.75% during the forecast period. Utility firms must invest in IT design and analytics skills that allow them to develop swiftly and extract crucial business insights from data, enabling them to make better decisions. Peak load management, energy efficiency, customer segmentation, leak analysis, outage analytics, and water conservation are common issues in smart utility systems. Smart Metering is an IoT-based tool for calculating the amount of gas, water, and energy used in residential and commercial structures. Utility firms can access smart asset data, customer data, utility distribution, consumption history, and much more using smart metering and utility analytics tools to gain a thorough insight into their utility usage patterns and operations. Implementing smart utility solutions is more crucial in poorer nations because their network infrastructure is less developed. Its adoption will primarily aid the region's growth by reducing power outages and ensuring a steady supply of other utilities like gas and water.
The smart city movement leads citizens to expect more from their urban environments. Growing cities are expected to provide citizens with better access, greater energy efficiency, and more convenience. However, smart cities should also ensure the safety of their citizens. The technology ensures public safety in such environments and lays the groundwork for future advancements. Smart cities are constantly looking for ways to make their operations more efficient while providing services and infrastructure that help people live safely in their homes, neighborhoods, and public spaces. There are multiple ways in which smart cities can implement smart public safety solutions using sensors, big data, and artificial intelligence as part of the Internet of Things revolution. Cities can utilize intelligent functionality and data utilization, sustainably extend public safety capabilities, and utilize the latest technologies with minimal infrastructure investment.
Asia-Pacific Dominates the Global Market
The global smart cities market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
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Asia-Pacific is the most significant shareholder in the global smart cities market and is expected to grow at a CAGR of 25.5% during the forecast period. To create a smart city governed by AI, a Chinese tech company BIG (Danish architecture firm) has been closely collaborating on a project (one of 500 smart cities planned across China). The system is intended to collect data on dietary preferences, weather patterns, and other data points necessary to suit inhabitants' requirements and handle issues like traffic congestion and crime. The AI-run campus-style project Cloud Valley, slated to be built in the city of Chongqing in southwest China, will use Wi-Fi-connected gadgets and sensors to collect data on everything. The industry is seeing a sizable pool of potential for expanding the market, with more than 200 local governments, businesses, colleges, and public sectors joining the SCI-Japan. Many multinational corporations are also looking to the country for its cutting-edge technology, which is anticipated to drive market growth.
Europe is expected to grow at a CAGR of 19.65%, generating USD 1,154.05 billion during the forecast period. London is one of the well-known smart cities, and the United Kingdom has been acknowledged as a pioneer in developing smart cities. In a race to adopt smarter technologies, local governments all across the UK are engaged in several smart city projects that aim to enhance services and open up new opportunities. Additionally, a well-known IoT and Smart City operator, Connexin, declared in December 2020 that it would expand its IoT network countrywide and offer carrier-grade roaming LoRaWAN connectivity and infrastructure to the UK's clients. The UK government developed several schemes that give cities direct funds for investing in smart initiatives through Innovate UK, the UK's innovation agency. The German ICT market is crucial to maintaining the industrial production strength of the nation. German businesses have embraced IoT technologies quickly, with the manufacturing and automotive sectors setting the pace.
Unsurprisingly, various smart city initiatives are finding growth opportunities in the United States due to the country's superior infrastructure, growing economy, and free market, which are essential for innovation and entrepreneurship. New York is also considered one of the leading smart cities. Smart monitoring technology has assisted the city in more cost-effective resource management. The town has automated meter reading units to provide better information on actual water consumption and issue much more precise bills to its residents. Smart city programs have gained momentum over the past decade as many local governments have begun digital transformation operations. Carbyne's public safety technology provider disclosed that it collaborated with Cisco Systems Inc. to offer cloud-based and IoT-enabled solutions for emergency dispatch centers.
With the aid of its cloud-based security project, Mexico City launched a public safety campaign. The city built 58,000 new video surveillance cameras linked to the city's C5 (Command, Control, Computers, Communications, and Citizen Contact) facilities, in neighborhoods and on public transportation around the city. Planet Smart City, a global leader in affordable smart housing, has expanded its footprint in Brazil by opening Smart City Aquiraz, its fourth smart project in the country. More than 18,000 people will live on the 200-hectare property, just 29 km from Fortaleza, the capital of Ceará, and 6 km from Praia Bela, a well-liked tourist destination.