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Smart cities market to hit $2tn by 2025, buoyed by AI and new platforms

The value of the smart cities market will pass $2 trillion by 2025 as artificial intelligence (AI) technologies become standardised in city functions and the final hurdle of inter-departmental integration is finally overcome, according to new research by Frost & Sullivan.

Different regions are putting different focus on their smart city projects, it says, with Asia Pacific prioritising smart energy, North America prioritising smart buildings, and Europe prioritising smart mobility. Europe will have the largest number of smart city project investments globally, given the European Commission’s commitment to smart city and smart industry initiatives.

Personalised healthcare, robotics, advanced driver assistance systems, and distributed energy generation will also feature as technological cornerstones of smart cities, according to Frost & Sullivan. But AI will be the most significant contributor to the projected growth in the market, it said.

“AI 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, principal consultant at Frost & Sullivan.

Nevertheless, smart city development will remain in a rut, rather than a groove, until city administrations and tech providers combine to overcome proprietary systems and siloed operations. “Currently most smart city models provide solutions in silos and are not interconnected,” said Vijay Narayanan, senior research analyst at Frost & Sullivan.

“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.”

AI will play a key role in every smart-city vertical, notes Frost & Sullivan, and notably in applications for parking, mobility, energy, and waste management. Different regional priorities are emerging, it says. The Asia-Pacific region is anticipated to be the fastest-growing region in the smart energy space by 2025. In Asia, more than 50 per cent of smart cities will be in China. Smart city projects will generate $320 billion for China’s economy by 2025.

North America is catching up, with many tier-two cities like Denver and Portland now committed to driving out operational efficiencies and enterprise opportunities by connecting their systems and assets. Frost & Sullivan says the total market in North America for smart buildings, comprising sales of sensors, systems, hardware, controls, and software, will hit $5.74 billion in 2020.

By contrast, Europe is putting more focus on mobility solutions. The European e-hailing market currently generates revenues of $50 billion and is estimated to reach $120 billion by 2025, said Frost & Sullivan. A number of cities are emerging as new civic technology hubs in Latin America, including Mexico City, Guadalajara, Bogotá, Santiago, Buenos Aires and Rio de Janeiro.

Guadalajara’s smart city story is examined in depth in the Enterprise IoT Insights editorial report, ‘The building blocks of a smart city’, along with reviews of programmes in Barcelona in Spain, San Diego in the US and Manchester in the UK.

ABOUT AUTHOR

James Blackman
James Blackman
James Blackman has been writing about the technology and telecoms sectors for over a decade. He has edited and contributed to a number of European news outlets and trade titles. He has also worked at telecoms company Huawei, leading media activity for its devices business in Western Europe. He is based in London.