Smart Cities Market Size, Share & Trends Analysis Report By Component (Hardware, Software, Service), By Solutions (Smart Mobility Management, Smart Public Safety, Smart Healthcare, Smart Building, Smart Utilities, Smart Security, Smart Education, Other Solutions, Smart Environment, Smart Buildings, Smart Governance), By Technology (IOT (Internet of Things), Artificial Intelligence, Cloud Computing, Machine Learning, Machine-to-Machine Communication, Other Technologies) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global smart cities market size was valued at USD 1,208.9 billion in 2023. It is projected to reach USD 9,137.4 billion by 2032, growing at a CAGR of 25.2% during the forecast period (2024-2032).

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.

Market Dynamics

Global Smart Cities Market Drivers

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.

Global Smart Cities Market Restraint

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.

Global Smart Cities Market Opportunities

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.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global smart cities market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

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.

Segmental Analysis

The global smart cities market is segmented By Component, Solutions, and Technology

Based on Components

The Smart City Market is segmented into hardware, software, and services. In 2022, the hardware segment held the largest market share, accounting for 44.3%. The hardware segment serves as the tangible foundation for Smart City implementations, including a wide array of physical components such as sensors, devices, communication infrastructure, and advanced equipment. These elements are crucial for capturing real-time data from urban environments, facilitating the seamless flow of information necessary for informed decision-making.

Based on Technology

The global Smart City market is segmented by technology into IoT (Internet of Things), Artificial Intelligence, Cloud Computing, Machine Learning, Machine-to-Machine Communication, and other technologies. IoT plays a crucial role by enabling seamless connectivity and data exchange between various smart city components, enhancing urban management and services.

Artificial Intelligence drives predictive analytics and automation, improving efficiency in traffic management, energy usage, and public safety. Cloud Computing offers scalable and flexible data storage solutions essential for managing the vast amounts of data generated in smart cities.

Machine Learning aids in optimizing resource allocation and enhancing decision-making processes through data-driven insights. Machine-to-Machine Communication facilitates direct interaction between devices, ensuring real-time monitoring and control of urban infrastructure.

Other emerging technologies contribute to the holistic development of smart cities, addressing specific urban challenges and improving the quality of life for residents.

Impact of covid-19

The automotive industry is critical to the economy's growth. However, during the second and third quarters of 2020, the COVID-19 outbreak impacted the whole automotive supply chain, affecting new car sales in FY 2020.

South America is most affected by COVID-19, with Brazil leading the way, followed by Ecuador, Chile, Peru, and Argentina. South America's government (SAM) has taken a number of steps to protect its citizens and stem the spread of COVID-19. South America is expected to have fewer export revenues as commodity prices fall and export volumes fall, particularly to China, Europe, and the United States, which are all significant trading partners. The manufacturing industry, especially automotive manufacturing, has been damaged by containment measures in various South American countries. Due to the pandemic, major automotive manufacturers have also temporarily halted manufacturing in the region as a cost-cutting move. Furthermore, the automobile disc brake industry has been significantly affected in 2020 due to a lack of raw materials and supply chain disruption.

The Automotive Brake System control module of a vehicle is meant to alert the driver with a warning light if the system fails. The module itself is rarely defective; instead, the sensors or the wiring to the sensors are frequently defective. The most typical cause of dysfunction is when the Automotive Brake System is contaminated with particles or metal shavings. There is no signal continuity when sensor wiring is destroyed. Brake fluid becomes contaminated in corrosive situations, and the hydraulic unit fails to function.

Recent Developments

• January 2022- Emerson’s new edge solutions simplified the creation of advanced IIoT applications.