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Smart cities market to be worth over $2 trillion by 2025

Asia-Pacific is anticipated to be the fastest growing in smart energy and more than 50 per cent of Asian smart cities will be in China

Europe will have the largest number of smart city project investments globally
Europe will have the largest number of smart city project investments globally

The market for smart cities is projected to exceed $2 trillion by 2025 with artificial intelligence (AI) forming a key cornerstone of the growth, a new report suggests.


According to business consulting and market research firm Frost & Sullivan, next to AI, robotics, distributed energy generation, and personalised healthcare will be among technologies that will drive growth, efficiency, connectivity, and urbanisation


More than four fifths of the population in developed countries are expected to live in cities by 2050 making it an ideal time to seize the huge business opportunities it presents. The creation of smart cities enables a smooth transition to urbanisation, with technological advances helping municipalities optimise resources for maximum value to the population, whether that value is financial, savings in time, or improvement in quality of life, the report states.


“Artificial Intelligence has been the most funded technology innovation space in the past two years, with large investments coming from independent and corporate venture capital companies,” said Jillian Walker, visionary innovation principal consultant at Frost & Sullivan.


AI plays a key role in smart cities in the areas of smart parking, smart mobility, the smart grid, adaptive signal control, and waste management. Corporations, such as Google, IBM, and Microsoft, remain key tech innovators and the primary drivers of AI adoption.


Other significant findings include:

  • AI, robotics, advanced driver assistance systems (ADAS), distributed energy generation, personalised healthcare and other five technologies are believed to be the technological cornerstones of smart cities of the future
  • The Asia-Pacific region is anticipated to be the fastest-growing region in the smart energy space by 2025
  • In Asia, more than half of smart cities will be in China. Smart city projects will generate $320bn for China’s economy by 2025
  • North America (NA) has been quickly catching up, with many tier II cities, such as Denver and Portland, committed to building their smart city portfolios
  • The total NA smart buildings market, comprising the total value of smart sensors, systems, hardware, controls, and software sold, is projected to reach $5.74bn in 2020
  • Europe will have the largest number of smart city project investments globally, given the engagement that the European Commission has shown in developing these initiatives
  • The European e-hailing market, central to cities developing smart mobility solutions, currently generates revenues of $50bn and is estimated to reach $120bn by 2025
  • In Latin America, cities actively developing smart city initiatives include: Mexico City, Guadalajara, Bogotá, Santiago, Buenos Aires and Rio de Janeiro. In Brazil, smart city projects will drive almost 20 per cent of the overall $3.2bn IoT revenue by 2021.

“Currently most smart city models provide solutions in silos and are not interconnected. The future is moving toward integrated solutions that connect all verticals within a single platform. IoT is already paving the way to allow for such solutions,” added Vijay Narayanan, visionary innovation senior research analyst at Frost & Sullivan.


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