Smart Cities Market Size, Share, Forecast, & Trends Analysis by Solution (Smart Citizen Services, Smart Buildings, Smart Transportation, Smart Utilities), Component (Hardware, Software, Services), Technology (IoT, Cloud Computing, Machine Learning), and Geography - Global Forecast to 2031

The Smart Cities Market was valued at $622.3 billion in 2023. This market is expected to reach $3,967.7 billion by 2031 from an estimated $748.3 billion in 2024, at a CAGR of 26.9% during the forecast period from 2024 to 2031.

Smart Cities Market Size & Forecast

The growth of the smart cities market is primarily driven by government initiatives to manage the needs of the rising urban population and the growing need for resource management & sustainable development. Moreover, the integration of artificial intelligence and the increasing use and wide applications of IoT technology are expected to generate growth opportunities for the players operating in this market.

Smart Cities Market Growth Drivers

Government Initiatives to Manage the Needs of the Rising Urban Population

Rapid urbanization has presented new challenges, such as addressing the increasing demand for housing and developing infrastructure, transportation systems, basic services, and job opportunities. Effective planning and provision of these essential services are crucial to meet the needs of the growing population. To tackle these challenges, government agencies globally are launching initiatives to create interconnected smart cities, utilizing technologies like the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), M2M communication, and cloud computing. These technologies aim to provide residents with advanced infrastructure, a cleaner and more sustainable environment and improved living standards.

For instance, in March 2023, the Indian government allocated ₹16,000 crore (USD 1.9 billion) to its Smart Cities Mission for the fiscal year 2024. The Union Budget for 2023–24 focuses on developing sustainable cities of the future by encouraging states and cities to implement urban planning reforms. These reforms include efficient land use, transit-oriented development, increased availability and affordability of urban land, and equitable opportunities for all. Such initiatives are fostering economic growth and enhancing quality of life by supporting local infrastructure development and leveraging technology-based solutions to improve urban sustainability.

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Smart Cities Market Growth Opportunity

Increasing Use and Wide Applications of IoT

Implementing IoT technology enhances the efficiency and sustainability of smart cities by optimizing infrastructure management and maintenance. It allows authorities to collect data through smart sensors, remotely monitor asset operations, and develop and execute resource management strategies. This approach maximizes the efficiency of city systems and equipment, improves the quality of services for citizens, and reduces costs. However, for effective management of a smart city, IoT technologies need to be integrated with digital cloud-based platforms. This integration centralizes data on a single platform, facilitating easy access to and interpretation of the vast amounts of data collected by sensors.

Key smart city applications of IoT include:

• Urban Lighting: Streetlights equipped with sensors adjust their activation and light intensity based on the presence of vehicles and pedestrians or in response to weather conditions. This reduces energy consumption, ensures optimal road illumination, enhances visibility in dimly lit areas, and improves overall road safety.
• Waste Management: Waste containers fitted with sensors can automatically detect when they are full and transmit this data to operators. This capability allows for the optimization of collection routes, making the disposal process more efficient and timely.
• Air Quality Monitoring: Air quality monitoring devices continuously track environmental parameters such as humidity and temperature. They detect and measure particles and pollutants, providing users with data on concentration levels that may pose risks to human health.
• Public Safety: Smart surveillance cameras are extensively used in public and private areas to identify people and vehicles in motion and detect critical issues such as theft and road accidents.

Thus, the increasing use of IoT technology is expected to generate growth opportunities for the companies operating in the smart cities market.

Smart Cities Market Analysis: Key Findings

The Smart Citizen Services Segment to Dominate the Smart Cities Market in 2024

Based on solution, the smart cities market is segmented into smart citizen services, smart environment, smart buildings, smart transportation, smart utilities, and other smart cities solutions. In 2024, the smart citizen services segment is expected to account for the largest share of over 48.0% of the smart cities market. This segment’s substantial market share is attributed to the rising demand for smart street lighting, the increasing adoption of connected healthcare solutions, the need for more efficient and scalable public services, and the growing concern for public safety and security. Moreover, this segment is expected to register the highest CAGR during the forecast period.

The Hardware is Segment to Dominate the Smart Cities Market in 2024

Based on component, the smart cities market is segmented into hardware, software, and services. In 2024, the hardware segment is expected to account for the largest share of over 40.0% of the smart cities market. This segment's substantial market share is due to the increasing need to upgrade infrastructure with sensors, smart grids, and automated systems, as well as the rising demand for advanced sensors and data management systems. Additionally, the growing need for smart traffic management systems, automated parking solutions, and vehicle tracking systems contributes significantly. The high demand for hardware used in surveillance cameras, emergency response systems, and smart street lighting to enhance urban safety further supports this segment's large market share.

However, the services segment is expected to register the highest CAGR during the forecast period. The growing need for system integration and deployment services in various smart city applications, coupled with the rising demand for network services in smart buildings, is expected to drive growth in this segment.

The IoT is Segment to Dominate the Smart Cities Market in 2024

Based on technology, the smart cities market is segmented into IoT, artificial intelligence, cloud computing, machine learning, machine-to-machine communications, and other technologies. In 2024, the IoT segment is expected to account for the largest share of over 37.0% of the smart cities market. This segment’s substantial market share is attributed to the growing demand for IoT solutions to efficiently manage infrastructure, services, and resources; advancements in IoT devices, sensors, and connectivity technologies; the increasing prevalence of connected vehicles and autonomous drones; and the rising need for advanced security measures, such as smart surveillance.

However, the cloud computing segment is expected to witness the highest CAGR during the forecast period. The rising demand for cloud platforms to handle real-time data processing and analytics, coupled with the increasing need for effective resource management and sustainable development, is anticipated to drive growth in this segment. Additionally, the advantages provided by cloud computing—including real-time data processing, scalability, advanced analytics, enhanced security, disaster recovery, and backup, and cost efficiency—further support the growth of this segment.

Geographic Analysis

Asia-Pacific to Dominate the Smart Cities Market

Based on geography, the smart cities market is segmented into North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa. In 2024, Asia-Pacific is expected to account for the largest share of over 30.8% of the smart cities market. The region's substantial market share is attributed to the presence of major players in the smart cities sector. Additionally, rapid urbanization, increasing government initiatives for smart city projects, and a rise in demand for cost-effective IoT solutions further contribute to the region's large market share. Partnerships among market players aimed at developing smart city solutions are also driving market growth in Asia-Pacific. For example, in December 2021, Dassault Systèmes SE (France) signed a Memorandum of Understanding (MoU) with NTT Communications Corporation (Japan) to advance the development and management of sustainable smart cities in Japan.

Asia-Pacific is also slated to register the highest CAGR of 38.0% during the forecast period. This region's growth is driven by the rising demand for smart building solutions, the integration of IoT technology and cloud computing in smart cities, and the growing government initiatives and funding for smart city applications.

Smart Cities Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios, geographic presence, and key growth strategies adopted in the last three to four years. Some of the key players operating in the smart cities market are Cisco Systems, Inc. (U.S.), Huawei Technologies Co., Ltd. (China), IBM Corporation (US.), Siemens AG (Germany), Cognizant Technology Solutions Corporation (U.S.), Schneider Electric SE (France), Intel Corporation (U.S.), Qualcomm Technologies, Inc. (U.S.), Fujitsu Ltd. (Japan), Robert Bosch GmbH (Germany), Atos SE (France), Foxconn Electronics Inc. (Hon Hai Precision Industry Co. Ltd.) (China), LTlMindtree Limited (India), General Electric Company (U.S.), Capgemini SE (France), Microsoft Corporation (U.S.), ABB Ltd. (Switzerland), Oracle Corporation (U.S.), Honeywell International, Inc. (U.S.), and NEC Corporation (Japan).

Smart Cities Industry Overview: Latest Developments from Key Industry Players

• In March 2023, Siemens AG (Germany) launched Connect Box, an open and easy-to-use IoT solution designed to manage small- to medium-sized buildings.

• In March 2023, Honeywell International, Inc. (U.S.) implemented phase one of the Bangalore Safe City project, which aims to build a safe & secure environment through Honeywell’s smart and connected safety & security technology.

Smart Cities Market Research Summary

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