Smart Cities Market Size, Share & Trends Analysis Report By Application, By Smart Governance, By Smart Utilities, By Smart Transportation, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global smart cities market size was valued at USD 1,226.9 billion in 2022 and is expected to register a compound annual growth rate (CAGR) of 25.8% from 2023 to 2030. The increasing urbanization, the need for efficient management of resource utilization, public safety concerns, and increasing demand for an environment with efficient energy utilization are the major driving factors for the smart cities' market growth. 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 (A.I.) to overcome the challenges faced during the pandemic.

The need for sustainable structure due to the growing population and urbanization has become significant for market growth. Several regional governments are trying to handle these problems via smart city initiatives across serviceable segments, such as mobility, utility, safety, and management. The local governments have also been at the forefront of stimulating organizational and institutional changes, enabling steady investments, and creating a consortium for bringing diverse businesses together. The emergence of a new genre of public-private partnerships is also a particular development attributable to the smart city’s developments. Further, infrastructure development financing and funding models and governance systems are playing a major role in fueling the smart cities market.

The smart cities' market growth can be attributed to the growing adoption of nanotechnology, Artificial Learning (A.I.), Machine Learning (ML), cloud computing, IoT, cognitive computing, big data analytics, and open data. Moreover, the increasing implementation of Build-Own-Operate (B.O.O.), Build-Operate-Transfer (B.O.T.), Original Brand Manufacturer (O.B.M.), and Bill of Material (B.O.M.) 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 market growth further. For instance, in December 2021, the U.A.E. 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, A.I., and smart sensors, to monitor city infrastructure, their application varies across projects and from city to city. The key driving factors for implementing smart city solutions are the need to improve resilient cities, reduce energy, and concern over the increase of environmental waste. 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 Corporation, are actively investing in R&D activities related to connected infrastructure in smart city development worldwide.

The smart cities concept has been gaining traction in recent years owing to numerous novel advantages smart cities can provide. However, several barriers are affecting the growth of the market. The high initial costs that are the prerequisite for the upheaval of the existing infrastructure of cities may restrain the growth of the market. The sheer number of financial commitments needed for the projects has been an important factor in slowing down market developments. However, the current scenario is expected to change in the coming years as there have been many other investment techniques that are gaining popularity, such as Build Transfer (B.T.), Build Operate Transfer (B.O.T.), Build Own Operate (B.O.O.), and public-private partnerships.

Application Insights

The smart utility segment dominated the market and accounted for a market share of over 28% in 2022. The smart utility segment forms an integral part of the city infrastructure and includes multiple domains such as water treatment, consolidated data management, energy distribution, and civil distribution infrastructure management, among others. The advent of smart grids is also a significant factor driving the adoption of smart utilities. Integration of advanced data analytics and cloud technologies is also expected to drive market growth. With the rapidly increasing demand for energy, companies and governments are formulating and implementing strategies for improving renewable sources' contribution to overall energy production.

The environmental solution segment is anticipated to witness significant CAGR of 28.8% over the forecast period. The development of the segment can be attributed to the rising government initiatives to curb pollution, optimize renewable energy usage, and establish a sustainable ecosystem for businesses. The industry players focus on improving their environmental solution portfolio to enhance their brand identity and increase their market revenues. For instance, in December 2021, IoT and A.I. solution company SENSORO launched the Environmental, social, and governance (E.S.G.) solution brand SENSORO Solution to provide climate monitoring, garbage classification, and ecological protection solutions.

Smart Utilities Insights

The energy management segment dominated the smart utilities segment in 2022 and accounted for more than 55% of revenue. 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 L.L.C. 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 waste management segment is expected to witness a significant CAGR of 27.0% over the forecast period. Several governments are approaching system integrators, distributors, and OEMs for smart trash bin installation across various cities. Local governments, technology solutions providers, distributors, and system integrators are the major stakeholders in implementing city-level waste management projects. Different mobile apps are also being developed to monitor the fill levels of bins and add to the users' convenience. OEMs and system integrators are particularly focusing on venues that are more crowded and can often result in generating higher volumes of waste to deploy smart garbage bins and other waste management equipment, supporting the industry growth.

Smart Transportation Insights

The Intelligent Transportation System (ITS) segment accounted for the largest revenue share of over 46% in 2022. The increasing number of vehicles on the road and the need to reduce traffic congestion are 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 government of several countries is 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 26.1% growth 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 effectively utilizing available parking spaces to reduce pollution and traffic jams. These factors will further boost the demand for parking management systems during the forecast period.

Smart Governance Insights

The smart infrastructure segment dominated the market and accounted for a market share of over 28% in 2022. Shifting various governments' focus on digitizing their business operations is anticipated to fuel the demand for smart infrastructure solutions in multiple sectors such as BFSI, healthcare, retail, manufacturing, and F&B. The majority of governments, such as the U.K., Australia, India, Canada, the U.A.E., and the U.S., are investing in smart infrastructure solutions for economic digitalization. For instance, in December 2021, the Government of Australia invested USD 135.9 million under its program to transform the economy into a digital economy by 2030. The government will also create the regulatory framework for BFSI infrastructure to support, monitor & control evolving payment systems and crypto-ecosystems.

The smart lighting segment is expected to witness significant CAGR of 25.8% over the forecast period. Increasing the energy efficiency of the city and reducing costs of energy and maintenance, smart lighting can also provide a backbone for a wide range of smart city applications, including traffic management, public safety, environmental monitoring, smart parking, and extended Wi-Fi and cellular communications, among others. Smart lighting has gained much traction in recent years due to the evolution of human-centric lighting with light emitting diodes and organic light-emitting diodes.

Regional Insights

North America held the major share of over 30% of the global smart cities market in 2022. 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 (I.C.T.) infrastructure, the collaboration of federal and local governments with I.C.T. vendors, and the presence of prominent technology vendors. These service providers and other local authorities 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 regional market's growth during the forecast period.

Asia Pacific is expected to witness a significant CAGR of 29.2% growth over the forecast period. The region’s growth can be credited to the rise in disposable income, the development of digital infrastructure, globalization, and economic developments. Organizations in Asia Pacific are keen on exploiting benefits, such as cost-effectiveness, associated with cloud-based solutions, which bodes well for the growth of applications such as smart transportation, smart governance, smart utilities, and smart building.

Key Companies & Market Share Insights

Market players are observed to invest resources in research and development 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 in the market. 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 October 2021, ABB Limited announced investing in BrainBox A.I., a Montreal-based start-up, to integrate BrainBox A.I.’s self-adaptive and predictive artificial intelligence with its existing Ability portfolio for smart buildings. Further,in December 2021, G.E. announced a partnership with U.K. Power Networks to launch a smart substantiation project designed to optimize the distribution network's application to facilitate renewable energy generation across the U.K. Some of the prominent players in the 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 

Global Smart Cities Market Segmentation

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 2018 to 2030. For the purpose of this study, Grand View Research has segmented the smart cities market based on application, smart governance, smart utilities, smart transportation, and region:

• Application Outlook (Revenue, USD Billion, 2018 - 2030)

  • Smart Governance

  • Smart Building

  • Environmental Solution

  • Smart Utilities

  • Smart Transportation

  • Smart Healthcare

• Smart Governance Outlook (Revenue, USD Billion, 2018 - 2030)

  • City Surveillance

  • C.C.S.

  • E-governance

  • Smart Lighting

  • Smart Infrastructure

• Smart Utilities Outlook (Revenue, USD Billion, 2018 - 2030)

  • Energy Management

  • Water Management

  • Waste Management

• Smart Transportation Outlook (Revenue, USD Billion, 2018 - 2030)

  • Intelligent Transportation System

  • Parking Management

  • Smart Ticketing & Travel Assistance

• Regional Outlook (Revenue, USD Billion, 2018 - 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