Smart Cities Market Size, Share & Trends Analysis Report By Application, By Smart Governance, By Smart Utilities, By Smart Transportation, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global smart cities market size was valued at USD 1,090.64 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 24.2% from 2022 to 2030. The increasing urbanization, need for efficient management of resource utilization, public safety concerns, and increasing demand for an environment with efficient energy utilization are the major growth drivers. Due to the COVID-19 pandemic, countries followed strict lockdowns and mobility constraints to avoid the spread of the virus. During the pandemic, the dependence of global economies on urban areas and the importance of public healthcare in smart city initiatives have been brought to light. However, organizations are trying to implement emerging technologies such as the Internet of Things (IoT) and Artificial Intelligence (AI) to overcome the challenges faced during the pandemic.

According to reports of World Urbanization Prospects published in 2019, by the UN Department of Economic and Social Affairs (UN DESA), the current urban population of 55.7% is expected to increase to 68.4% in 2050 globally. The need for sustainable structure due to the growing population and urbanization has become significant for the growth of the market.

Several regional governments are trying to handle these problems via smart city initiatives across serviceable segments, such as mobility, utility, safety, and management. Further, infrastructure development financing and funding models, and governance systems are playing a major role in fueling the smart cities market growth.

The market growth can be attributed to the rising adoption of nanotechnology, AI, Machine Learning (ML), cloud computing, IoT, cognitive computing, big data analytics, and open data. Moreover, the increasing implementation of Build-Own-Operate (BOO), Build-Operate-Transfer (BOT), Original Brand Manufacturer (OBM), and Bill of Material (BOM) business models is also driving the successful project execution of smart cities.

Asian countries have been pursuing numerous initiatives to encourage the adoption of digital technologies for smart cities while seeking to maintain consumer data privacy. Moreover, several government initiatives worldwide are anticipated to drive the market growth further. For instance, in December 2021, the UAE government achieved a 100% paperless transformation under the Smart Dubai Plan 2021.

Though smart city projects need a diverse set of technologies, such as IoT, AI, and smart sensors, to monitor city infrastructure, its application varies across projects and from city to city. The need to improve resilient cities, reduce energy, and concern over the increase of environmental waste is the key driving factors for implementing smart city solutions.

Additionally, the vendors invest in Research & Development (R&D) to establish new systems and technologies for connected infrastructure across smart city projects. The key players in the market, such as Cisco Systems, Siemens AG, and IBM, are actively investing in R&D activities related to connected infrastructure in smart city development worldwide.

Technological proliferation plays a major role in driving the growth of the smart cities market. Technologies, such as big data, cloud computing, and IoT, have helped in bringing about innovation by integrating the internet into day-to-day human functions, thereby simplifying and improving the quality of life.

For instance, in February 2019, Microsoft Corporation signed an agreement with The Department of Governance Reform of Punjab (India) to offer cloud services within the state. The cloud services provided by Microsoft Corporation will enhance the digital transformation and optimize IT operations in government departments and agencies located in Punjab. Thus, advancements in technology are expected to boost the smart city infrastructure growth prospects over the forecast period.

Application Insights

The smart transportation segment accounted for a market share of over 20% in 2021. The growing number of vehicles on the road, looming lack of traffic data management, and old infrastructure are some of the other factors anticipated to contribute to the segment growth. As a result, the need to manage the traffic flow across cities and highways has triggered the need for an alternative traffic management technology.

With the implementation of smart technologies and several efforts have been taken by both public and private organizations by varying measures, demonstrating the role of technology in shaping the future of the intelligent transportation system market.

The smart governance segment is anticipated to witness a significant CAGR of 23.7% over the forecast period. The growth can be attributed to the adoption of smart technologies, implemented by the governments to improve transparency, accountability, security, and citizens’ participation, by creating a progressive government-public partnership.

With the help of system integrators, Original Equipment Manufacturers (OEMs), and distributors, governments of various regions are employing video surveillance systems in several cities to detect and avoid criminal activities and improve smart governance. For instance, in March 2021, Dahua Technology introduced smart residential solutions, which have to offer panoramic cameras and other advanced equipment to provide security and monitoring for different locations in residential areas.

Smart Governance Insights

The city surveillance segment accounted for a market share of over 20% in 2021. The segment growth can be attributed to the increasing public safety and security concerns, which encourage the usage of video management systems and IP cameras across the globe.

It is a crucial parameter in developing a smart city for managing and monitoring transportation systems, civil bodies, public assets, and other community services. Further, the increasing technological advancements in analytics and software and reduced IP camera prices are the key driving factors for the growth of the city surveillance segment.

The Command and Control Center (CCC) segment is expected to witness a significant CAGR of 21.4% over the forecast period. The CCC center is used to access and monitor smart city applications, such as waste management solutions, smart lighting, energy management, city surveillance, Intelligent Traffic Management System (ITMS), and smart parking.

Further, the center is made for handling the operations of the smart cities, which includes controlling deviations and disaster management. For instance, in September 2021, an Integrated CCC was formed in Jammu city under the Smart Cities Mission to create an IT-based monitoring system to bring several smart services and solutions under one umbrella.

Smart Utilities Insights

The energy management segment held the leading revenue share of more than 55% in 2021. The growing energy demand has sparked the adoption of virtual power plants, which operate on AI, machine learning, and IoT to provide security and efficiency. Key market players are focusing on establishing a strong R&D infrastructure to drive the development and overview of advanced energy management systems and design analytics solutions, to integrate emerging technologies such as blockchain.

For instance, in October 2020, Nevada Utility announced a partnership with Las Vegas-based Blockchain LLC and Switzerland-based nonprofit Energy Web Foundation, to introduce blockchain-enabled smart meters, which would track how much energy is produced and turned into energy portfolio credits (a tracking metric for how much renewable energy the state produced).

The water management segment is expected to witness a significant growth of a CAGR of 23.8% over the forecast period. The growing concerns for sustainable living led to the implementation of several regulations and laws to execute water management solutions in their cities with system integrators and OEMs.

With the technological innovations, water utilities are adopting smart solutions, such as IoT-enabled Advanced Metering Infrastructure (ATM) smart water meters, to accelerate various business processes and allow the user to collect actionable information and make informed decisions about optimized water distribution and its usage. These smart solutions are expected to surge the demand for water management solutions during the forecast period.

Smart Transportation Insights

The Intelligent Transportation System (ITS) segment accounted for the largest share of over 45% in 2021. The increasing number of vehicles on the road and the need to reduce traffic congestion are also key factors in deploying advanced traffic management systems. These systems reduce delays and air pollution, ensure efficient traffic management by reducing travel duration, and enable authorities and public safety agencies to rapidly and efficiently respond to accidents and emergencies.

Furthermore, the governments of several countries are adopting intelligent transportation systems to improve road safety and operational performance of the transport system and reduce the impact of transportation on the environment.

The parking management segment is anticipated to witness a significant CAGR of 24.6% over the forecast period. The segment growth can be attributed to the demand for efficient parking space management, environmental protection cost reduction, solutions to improve the convenience of end-users, and improved safety and security in parking lots.

The rising number of vehicles in cities makes it challenging for traffic departments to manage congestion problems. As a result, the smart city projects adopted by governments worldwide are now concentrating on the effective utilization of available parking spaces to reduce pollution and traffic jams. These factors will further boost the demand for parking management systems during the forecast period.

Regional Insights

North America held the major share of over 30% in 2021. The regional market growth can be credited to the constant digital transformation in various industry verticals, such as government, telecom, and banking, among others. The region has a well-developed Information and Communication Technology (ICT) infrastructure, the collaboration of federal and local governments with ICT vendors, and the presence of prominent technology vendors.

The ICT service providers and other local authorities in the region have widely deployed parts of the civic connectivity infrastructure which will lead to the planning for the construction of smart cities in the region. These factors will supplement the growth of the regional market during the forecast period.

Asia Pacific is expected to witness a significant CAGR of 27.7% over the forecast period, accredited to the economic developments, globalization, increased focus on the development of digital infrastructure, and a rise in disposable income. The government investments are aimed at sprucing up various departments, such as transportation, energy, and public security, to build smart cities in various regions.

Several smart city applications such as smart grids and buildings, smart transportation, and smart waste collection, are helping the cities in the Asia Pacific region to manage their growth more efficiently, resiliently, and sustainably.

Key Companies & Market Share Insights

The key industry participants include ABB Limited; Cisco Systems, Inc.; Schneider Electric SE; International Business Machines Corporation; Siemens AG; and Microsoft Corporation. Companies such as Honeywell International Inc.; Oracle Corporation; Huawei Technologies Co. Ltd.; Hitachi, Ltd.; and Intel Corporation, among others.

Market players are observed to invest resources in R&D activities to support growth and enhance their internal business operations. Companies can be seen engaging in mergers & acquisitions and partnerships to further upgrade their products and gain a competitive advantage. They are effectively working on new product development, and enhancement of existing products to acquire new customers and capture more market shares.

For instance, in August 2021, a digital automation and energy management company, Schneider Electric introduced EcoStruxureTM Rail in India, to provide a digital environment for metro rail operations in the country. This solution augments smart management, provides electrical safety, and improves energy efficiency by up to 25%. The solution would increase the overall efficiency up to 20% and reduce the total cost of ownership by 15%. Some prominent players in the global smart cities market include

• ABB Limited

• AGT International

• AVEVA Group plc.

• Cisco Systems, Inc.

• Ericsson

• General Electric

• Honeywell International Inc.

• International Business Machines Corporation

• Itron Inc.

• KAPSCH Group

• Huawei Technologies Co., Ltd.

• Microsoft Corporation

• Oracle Corporation

• Osram Gmbh

• SAP SE

• Schneider Electric SE

• Siemens AG

• Telensa

• Verizon

• Vodafone Group plc

Smart Cities Market Report Scope

Segments Covered in the Report 

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global smart cities market report based on application, smart governance, smart utilities, smart transportation, and region:

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • Smart Governance

  • Smart Building

  • Environmental Solution

  • Smart Utilities

  • Smart Transportation

  • Smart Healthcare

• Smart Governance Outlook (Revenue, USD Million, 2017 - 2030)

  • City Surveillance

  • CCS

  • E-governance

  • Smart Lighting

  • Smart Infrastructure

• Smart Utilities Outlook (Revenue, USD Million, 2017 - 2030)

  • Energy Management

  • Water Management

  • Waste Management

• Smart Transportation Outlook (Revenue, USD Million, 2017 - 2030)

  • Intelligent Transportation System

  • Parking Management

  • Smart Ticketing & Travel Assistance

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

    • Russia

    • Nordic Region

    • Eastern Europe

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • ASEAN

  • Latin America

    • Brazil

    • Mexico

    • MEA