The smart cities market is anticipated to expand at a compound annual growth rate (CAGR) of 15.6%, from roughly USD 699.7 billion in 2025 to USD 1,445.6 billion by 2030. Rapid urbanization, increased need for green infrastructure, developments in artificial intelligence (AI) and Internet of Things (IoT) technology, and pro-growth government policies are some of the drivers driving this rise. Further market expansion is also facilitated by rising investments in digital governance, intelligent mobility, and efficient energy systems. The need for resilient urban ecosystems and increased public knowledge are major factors in the uptake of smart city projects.
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A smart city uses advanced technologies and data-driven solutions to enhance urban living, optimize resource use, and improve sustainability. Key components include IoT sensors, AI analytics, smart grids, and connected infrastructure. These technologies enable real-time monitoring and efficient management of utilities, transportation, and public services. Smart infrastructure improves energy efficiency, reduces traffic congestion, and enhances public safety through predictive analytics. The adoption of smart city solutions is largely driven by rapid urbanization, environmental concerns, and the need for resilient infrastructure. Applications of these solutions range from smart waste management—which minimizes landfill use—to intelligent transport systems that reduce emissions, and green buildings that lower energy consumption. By integrating renewable energy sources and promoting eco-friendly practices, these solutions contribute to a greener future, fostering sustainable urban ecosystems that prioritize environmental conservation and improve residents’ quality of life.
“Commercial smart buildings are estimated to account for the largest share in the smart cities market during the forecast period.”
Commercial smart buildings are at the forefront of the smart building segment within the smart cities market, largely due to their high adoption rates in office buildings, retail spaces, and corporate office parks. This trend is driven by the demand for increased operational efficiency and cost reduction. These buildings implement various solutions, including automated building management systems (BMS) that help to reduce HVAC, lighting, and energy consumption. Smart visitor and access systems enhance security and streamline entry processes. AI-driven space optimization and data analysis maximize the use of space based on occupancy patterns. Additionally, IoT sensors monitor real-time environmental conditions, improving occupant comfort and facilitating facility maintenance. Collectively, these solutions enhance operational efficiency by minimizing power wastage, boosting security, and lowering operational costs. The strong demand for these solutions in commercial settings, combined with their scalability and measurable return on investment (ROI), solidifies their leading position in the market. Businesses are increasingly investing in sustainable, data-driven solutions to meet the evolving needs of modern cities.
“By smart transportation solutions, passenger information management is expected to register the fastest growth rate during the forecast period.”
Passenger information management (PIM) is expected to experience the fastest growth rate within the smart transportation segment of the smart cities market. This is largely due to its essential role in improving commuter experiences and operational efficiency. PIM systems utilize real-time information, the Internet of Things (IoT), and artificial intelligence (AI) to provide accurate and timely details about transit schedules, delays, and routes. This information is delivered through mobile applications, digital signage, and in-vehicle systems. PIM enhances commuter satisfaction, encourages the use of public transport, and helps to reduce traffic congestion. The rapid growth of urban areas and the increasing demand for seamless, technology-driven transportation solutions are key factors driving the adoption of PIM. Furthermore, the integration of PIM with smart ticketing platforms and mobility-as-a-service solutions enhances accessibility. As the focus shifts toward sustainable transport initiatives and data-driven city planning, the scalability of PIM, along with its ability to streamline transit networks, is driving its growth within the intelligent transport ecosystem.
“Based on region, Asia Pacific is projected to register the highest CAGR during the forecast period.”
The Asia Pacific region is projected to experience the highest CAGR in the smart cities market during the forecast period. This growth is driven by urbanization, the rise of a growing middle class, and increasing government investments in digital infrastructure. The significant population increase, particularly in India, China, and Southeast Asia, is creating greater demand for smart urban solutions. Initiatives such as India’s Smart Cities Mission and China’s New Urbanization Plan are key factors contributing to this growth.
Additionally, an improved macroeconomic outlook, the expansion of 5G networks, and public-private partnerships are promoting the development of smart cities in areas such as energy, transportation, and public services. The adoption of new technologies, along with goals for environmental sustainability, is further fueling market expansion. As megacities continue to develop, the Asia Pacific region is well-positioned to lead global innovation in smart cities, creating technology ecosystems and catering to a large consumer base that seeks an enhanced urban quality of life.
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Unique Features in the Smart Cities Market
Smart cities rely on Information and Communication Technology (ICT) to interconnect diverse systems such as traffic management, utilities, healthcare, and public services. This integration enables real-time data collection, processing, and sharing, enhancing decision-making and responsiveness.
Smart cities prioritize sustainability and eco-friendly development through green building standards, renewable energy integration, and urban green spaces. Features like energy-efficient architecture, smart grids, and water recycling systems contribute to minimizing environmental impact.
A core component is smart mobility, including features like adaptive traffic signals, autonomous vehicles, electric vehicle (EV) infrastructure, and integrated public transport apps. These systems aim to reduce congestion, emissions, and travel time.
The market is increasingly shaped by services that empower residents, such as mobile governance apps, participatory planning tools, and AI-based customer service bots. These tools enable transparency, feedback loops, and direct citizen engagement in urban management.
Smart cities use AI-powered surveillance, predictive policing, and emergency response systems to improve safety. Integrated command-and-control centers offer real-time crime mapping and incident alerts, ensuring proactive security measures.
Major Highlights of the Smart Cities Market
With more than half of the global population now living in urban areas, there is a pressing need for sustainable, efficient, and inclusive urban solutions. Smart cities address this need by integrating technology into urban infrastructure to improve quality of life and resource management.
Governments across the globe are actively investing in smart city projects. Programs like India’s Smart Cities Mission, China’s New-Type Urbanization Plan, and Europe’s Horizon 2020 have catalyzed market growth, offering public funding and regulatory support for digital transformation.
The market is being reshaped by innovations in AI, IoT, 5G, cloud computing, and edge technologies. These advancements enable real-time analytics, predictive management, and seamless automation, revolutionizing everything from traffic systems to energy grids.
The involvement of major tech companies, infrastructure providers, and startups is expanding the smart cities ecosystem. Public-private partnerships are proving essential for financing large-scale urban projects and ensuring scalability, innovation, and long-term success.
Smart cities encompass a wide range of sectors—transport, energy, healthcare, governance, security, education, and environment. Their interconnected nature ensures holistic urban development, creating synergies that drive economic and social progress.
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Top Companies in the Smart Cities Market
The major vendors in the smart cities market include Cisco (US), IBM (US), Siemens (Germany), Microsoft (US), Hitachi (Japan), Schneider Electric (France), Huawei (China), Intel (US), NEC (Japan), and ABB (Switzerland). These companies dominate the smart cities market by implementing a range of growth strategies, both organic and inorganic. Their approaches include collaborations, acquisitions, product launches, partnerships, agreements, and expansions aimed at enhancing their global presence and capturing a larger share of the smart cities market. These strategies have enabled market players to expand across various regions by offering innovative smart city solutions.
Siemens
Siemens, a global leader in automation, electrification, and digitalization technologies, holds a strong position in the smart cities market through its advanced digital solutions across infrastructure, transportation, and healthcare sectors. Some of its key offerings include Insights Hub, a cloud-based IoT analytics platform; Grid Edge, which focuses on decentralized energy systems; Intelligent Traffic Systems that improve urban traffic mobility; and Building X, a digital platform that enhances building efficiency and sustainability. Siemens actively participates in prominent projects, such as developing the smart infrastructure in Vienna’s Aspern district and creating an intelligent traffic network in Singapore. These initiatives reflect Siemens’ commitment to creating connected, smart, and efficient urban environments. As a result, Siemens plays a significant role in advancing smart city technologies, driving innovation, and enabling sustainable urban ecosystems worldwide.
Schneider Electric
Schneider Electric, headquartered in Rueil-Malmaison, France, is a global leader in energy management and automation. The company serves various sectors, including buildings, data centers, industry, infrastructure, and energy utilities. Schneider Electric has significantly advanced its growth in the smart cities market through its open, interoperable, IoT-enabled EcoStruxture platform. This platform enhances the energy efficiency, sustainability, and performance of urban systems by integrating connected solutions, edge control, and analytics. Some of Schneider Electric’s notable smart city projects include collaborations in Barcelona, where it implemented smart energy and building automation systems, and in Hyderabad, India, where it facilitated the development of smart infrastructure and command centers. These initiatives demonstrate Schneider Electric’s commitment to creating robust, efficient, and digitally advanced urban environments, positioning the company as a key enabler in the evolution of smart cities.
Cisco
Cisco (US) plays a pivotal role in the Smart Cities market by providing advanced networking and IoT solutions that enhance urban infrastructure and services. Through its Country Digital Acceleration program, Cisco collaborates with cities worldwide to implement technologies such as smart lighting, traffic management, and public safety systems, aiming to create more connected and sustainable urban environments . Notably, in India, Cisco contributed to the Golden Mile Project in Vijayawada, introducing features like free Wi-Fi, intelligent street lighting, and smart parking to improve city living . With a significant market share, Cisco continues to drive innovation in smart city initiatives globally.
IBM
IBM (US) is a key player in the Smart Cities market, leveraging its expertise in artificial intelligence, cloud computing, and data analytics to help cities optimize operations and enhance citizen services. Through its IBM Intelligent Operations Center and Watson AI platform, IBM enables cities to manage infrastructure, traffic, energy, and emergency response more efficiently. The company has worked with urban governments globally to develop smarter transportation systems, predictive policing tools, and sustainable resource management strategies, supporting its vision of data-driven, resilient cities.
Microsoft
Microsoft (US) is a prominent contributor to the Smart Cities market, offering a suite of digital solutions that enhance urban living through technology. Utilizing its Azure cloud platform, AI, IoT, and data analytics, Microsoft aids cities in improving infrastructure, sustainability, and citizen services. Their initiatives focus on areas like traffic management, energy efficiency, and public safety. Collaborations with global cities have led to the deployment of smart solutions that address urban challenges and promote economic growth. Microsoft’s commitment to smart city development underscores its role in shaping resilient and connected urban environments.
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