Smart Cities Market Outlook Report - Market Size, Share Analysis and Forecast (2025-2034)

The global smart cities market value reached approximately USD 1.14 Trillion in 2024. The market is assessed to grow at a CAGR of 15.30% between 2025 and 2034 to attain a value of around USD 4.73 Trillion by 2034. Growing urbanisation coupled with increasing investment in digital technologies in infrastructure sector is booting the smart cities market growth.

Global Smart Cities Market Growth

The smart cities industry growth is influenced by numerous factors such as growing population, urbanisation, and growing consumer shift towards smart homes. It is evident that growing numbers of urban residents demanding smart solutions to the problems of traffic congestion, pollution, and energy management have increased rapidly of the last five years. According to the 2023 statistics, more than 56% of the global population was already residents of urban areas and this figure is expected to reach 68% by the year 2050, which will exert excessive load on urban infrastructure facilities.

Additionally, the smart cities market dynamics and trends are also driven by government initiatives towards providing affordable and smart homes for growing population in their respective countries. Various governments across the globe are adopting smart city policies to fix public services, decrease energy utilisation and increase sustainability. For instance, the EU has recently created its facility called the Smart Cities Marketplace to facilitate smart city development; similarly, countries such as China and India are also investing significantly in smart city projects. In August 2024, the Indian government approved 12 new smart city projects under the National Industrial Corridor Development Programme with an investment of USD 3.41 billion.

In addition to above factors, technology tops the list of essential factors that are driving the smart cities industry revenue. AI, IoT and big data are applied to create intelligent infrastructure in cities to gather and analyse data and make improved decisions. The progression to 5G networks is also driving the smarter city market growth.

Global Smart Cities Market Analysis

The smart cities industry value is still emerging but growing, and varied depending on regional needs which require corresponding approaches. Currently, the smart city concept is modernising in developed areas, especially in North America and Europe, with the primary goals of raising energy use efficiency, enhancing public transportation, and optimizing waste administration. In contrast, the developing markets of Asia-Pacific, Latin America and Africa are employing the same for impacting basic needs of communities such as water, safety, and infrastructure. Hence, the smart cities market demand is varied based on the regional needs and their primary areas of focus.

Europe is a keen market for smart cities industry due to its rigorous environmental standards and sustainability. For instance, Horizon 2020, which is a research and technological development program of the European Union, has committed more than USD 73.5 billion for smart city interventions intended to enhance the quality of urban life, and lower carbon content.

However, the fastest growth rate during the forecast period will be experienced in Asia-Pacific region. China, Japan and other similar Asian countries are investing on smart city solutions to address the increasing population density in large human settlements. Currently, there are more over 500 cities involved in China's Smart city pilot project, covering smart transport, smart health, smart energy, etc.

Smart Cities Industry Outlook

The global smart cities industry value is all set for growth and development in the coming future, mainly due to technological growth and the growing need for efficiency in infrastructures in cities due to rising urbanisation, especially in the Asia Pacific region. Smart cities industry growth is and will continue to be driven by the AI, IoT and especially 5G technologies to deliver near real time innovative applications to improve city functionality. In 2023, adoption of 5G connections accelerated, reaching 1.76 billion globally by adding 700 million. The inclusion of 5G in smart cities will enable prolific use of sensors in various sectors like manufacturing, home appliance and transportation to enable better connectivity.

It’s anticipated that both governments and private firms would spend much more to support smart city initiatives thus, creating promising opportunities for the smart cities market. In the year 2023, smart city funding globally was estimated to be USD 189 billion with significant implies from both the public and institutional investors. The need for new smart solutions in transport, energy, health care and waste management will increase as more cities enter the process of becoming smart.

As climate change continues to become alarming and demand for carbon-free cities persists, the demand for smart cities market is expected to rise due to increase efforts by regions like Europe and America towards sustainability. Features such as the smart grid, new renewable energy resources and energy efficient buildings are gradually being incorporated into cities’ urban plans. According to 2023 data, investments for smart energy systems and control emerged to be over USD 50 billion out of which Europe and North America had larger propulsive projects.

Smart Mobility is another important aspect of the smart cities industry. Intelligent traffic systems, EV infrastructure, and self-driving vehicles are joining cities to enhance the traffic situation and minimize the impacts of traffic congestion. Opportunities for smart transportation solutions for global investors reached USD 96 billion in 2023. There is also progress in the creation of self-driving cars, and many projects are being actively implemented.

Smart cities have many layers of infrastructure, but IoT devices are increasingly the central system of the city, facilitating the dynamic exchange of data between city systems. Starting from smart lighting systems on the streets of smart cities to smart water supply and management, IoT devices assist city administrators and policymakers in serving citizens more efficiently through connected devices.

The solutions related to smart cities are also helping to improve safety and healthcare systems. Smart security systems; smart emergency response systems, and telemedicine are being integrated since they are efficient in providing safety and medical care.

Sustainability of environment is one of the main priorities in the smart cities industry. Governments of the cities are paying particular attention to the quantity of waste generated and managing water resources, together with enhancing the utilization of renewable energy sources. By 2023, more than 70% of smart city plans worldwide will expand on sustainability initiatives; many cities are now targeting to be net-zero by 2050.

Integration of AI, IoT, and 5G enables efficient management of urban services.

• Increasing governmental support and investments in smart city projects boost smart cities market growth.
• Emphasis on energy efficiency and eco-friendly solutions will further increase the smart cities industry demand growth.

Initial investments in smart infrastructure can be challenging for developing regions.

• The extensive use of data collection raises privacy and security issues especially in developing regions where advance data protection technologies are less prevalent.
• Lack of standardisation across regions hampers seamless integration of technologies will hamper the smart cities market growth.

Rapid urbanization in Asia-Pacific and Africa presents growth potential for smart city solutions.

• Increased focus on sustainability creates demand for smart energy and waste management solutions is expected to create opportunities for the smart cities market.
• Expanding 5G networks unlock opportunities for real-time city monitoring and automation.

Growing reliance on digital systems makes smart cities vulnerable to cyberattacks.

• Economic instability can delay or reduce investments in smart city infrastructure.
• Traditional urban management systems may still be preferred in some regions.

Key Players in the Global Smart Cities Market and Their Key Initiatives

Cisco Systems

• The company is focussing on offering IoT technology for smart city industry growth.
• In April 2024, Cisco signed MoU with ROSHN Group, a Saudi Arabia based real estate developer to explore the use of -of-Things (IoT) in sustainable smart buildings.

Siemens AG

• The company is focussing on offering green mobility.
• In July 2024, Siemens announced investment of USD 4.9 billion smart city regeneration project in Berlin for industrial transformation.

Honeywell International Inc.

• The company has keen focus on offering IoT solution for leverage smart city projects especially in America.
• In 2022, Honeywell launched Smart City Accelerator Program for smart city planning in 5 US cities: Cleveland, Louisville, Ky., Kansas City, Mo., San Diego, and Waterloo, Iowa.

Huawei Technologies Co. Ltd.

• The company is strategically focussing on providing advanced AI technologies with a keen focus on the Asia Pacific region.
• In September 2024, Huawei partnered with Talaat Moustafa Group (TMG) to leverage AI-powered cloud technology into the Noor City project.

Global Smart Cities Industry Segmentation

“Global Smart Cities Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:

Market Breakup by Componen:

• Services
• Hardware
• Software

Market Breakup by Solution:

• Smart Transportation
• Smart Building
• Smart Utilities
• Smart Public Safety
• Smart Healthcare
• Smart Security
• Smart Education
• Others

Market Breakup by Region:

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Global Smart Cities Market Share

Based on solution, the global smart cities market demand is driven by smart transportation.

Smart transportation holds a major share in the global smart cities market. This is due to increasing ancillary investment in smart infrastructure, together with advancements in high-end mobility solutions, such as driverless cars and digital rails. Growing digitization of payments and acceptance of e-tickets is also likely to boost this market segment. Given the increasing focus of governments around the globe on developing smart mobility systems, which are intelligent and user-friendly while promoting safety, the share of the smart transportation segment is anticipated to grow further in the forecast period.

Europe is expected to grow with a high CAGR in the global smart cities market.

Europe is expected to witness the highest growth in the global smart cities market due to increasing emphasis on clean energy transition, socioeconomic equity, and sustainability. The cities of Barcelona, London, Berlin, and Amsterdam are totally committed to the imperative of ICT technologies aimed at carbon neutrality, an ageing population's needs, and appealing job opportunities. As improvements in transit infrastructure, renovation of aging systems, and growth in the uptake of smart solutions such as smart meters are visualized to remain major market drivers through the years ahead, some market trends have started to respond to these needs.

Leading Companies in the Smart Cities Market

The companies specialise in offering advance AI, IoT ad 5G technologies for smart city development across different sectors like transportation, healthcare, utilities and many more.

• Cisco Systems, Inc.
• ABB Limited
• Siemens AG
• Honeywell International Inc.
• Huawei Technologies Co. Ltd.
• Microsoft Corporation
• IBM Corporation
• Oracle Corporation
• Schneider Electric SE
• Hitachi Ltd.
• Intel Corporation
• AT&T Communications, LLC