Smart Cities Market
Report ID: SQMIG45D2058
Report ID: SQMIG45D2058
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Report ID:
SQMIG45D2058 |
Region:
Global |
Published Date: June, 2025
Pages:
199
|Tables:
125
|Figures:
71
Global Smart Cities Market size was valued at USD 804.88 Billion in 2024 and is poised to grow from USD 952.98 Billion in 2025 to USD 3680.43 Billion by 2033, growing at a CAGR of 18.4% in the forecast period (2026–2033).
The widespread integration of IoT and connected devices across infrastructure systems enables real-time data collection and management. Growing investments in smart infrastructure, including e-governance platforms, smart grids, and intelligent transportation, are significantly speeding up the global smart cities market growth. Developments in communication technologies such as 5G and edge computing are enabling the deployment of sophisticated urban applications and seamless connectivity, which is expected to drive the expansion of the smart cities market.
Additionally, the growing need for intelligent transportation systems is a key driver of the market's expansion. Urban areas are increasingly adopting smart mobility solutions, such as integrated multimodal transport platforms, adaptive traffic signals, real-time transit updates, and driverless cars. Technologies aim to reduce emissions, ease traffic congestion, and enhance commuter experiences. Growing concerns about urban traffic inefficiencies and pollution are driving smart transport initiatives to become central to city planning strategies, which is speeding up the deployment of smart cities industry infrastructure.
Can Artificial Intelligence Solve Urban Challenges in Real Time?
AI is transforming smart cities market outlook by facilitating real-time decision-making, predictive maintenance, and effective city management. Cities like Barcelona and Singapore implemented AI to control traffic in 2024 and 2025, resulting in a more than 25% reduction in traffic. AI-powered garbage pickup systems in New York reduced gasoline consumption by 17% through route optimization. Tokyo made the city safer before major events by using AI monitoring and face recognition. Additionally, AI improved forecasts of Amsterdam's smart grid's energy consumption, reducing electricity waste. Our objectives for sustainability, security, and mobility are all aided by these modifications. Governments all over the world are investing more in AI-based platforms for smart governance, public services, and transportation as more people live in urban areas. An increasingly important component of smart city ecosystems is artificial intelligence.
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The global smart cities market is segmented into component, technology, application, solution, and region. By component, the market is divided into hardware, software, and services. According to technology, it is classified into IoT, AI & ML, cloud computing, 5G networking, and edge computing. Depending on the application, the market is categorized into transportation, waste management, energy management, utility management, public safety, and environmental monitoring. As per solution, the market is fragmented into smart governance, smart economy & development, smart transportation, smart monitoring & control, smart healthcare, and smart & sustainable environment. Regionally, it is analyzed across North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.
As per the 2024 global smart cities market analysis, the hardware segment dominated the market with USD 274.1 billion. The market's hardware segment is expanding due to the growing use of IoT devices, sensors, smart meters, and even entire systems in urban areas. For smart applications to function properly, additional hardware, including small cells, routers, and gateways, is needed as 5G networks and edge computing are implemented.
The software segment is expected to grow at a compound annual growth rate (CAGR) of 17.6% during the forecast period. The software sector is also essential to the infrastructure of smart cities since AI and other data techniques help with decision-making and real-time monitoring. Digital twins, cloud platforms, and AI-powered urban management are increasingly being used to manage cities, from energy optimization to traffic control.
Based on the 2024 global smart cities market forecast, the IoT segment led the market with USD 166.8 billion. The primary forces behind this growth are expanding smartphone adoption and widespread high-speed internet access, which are encouraging the creation of smart cities through mobile applications. Waste management, energy monitoring, and real-time parking are progressively integrated into smartphone platforms. To enhance urban mobility and public service responsiveness, Singapore's Smart Nation initiative, for instance, introduced IoT-enabled infrastructure alerts and AI-powered traffic updates to its MyTransport.SG app in April 2025.
Over the course of the forecast period, the AI & ML segment is anticipated to have the largest smart cities market share at a compound annual growth rate (CAGR) of 17.6% due to the increasing enterprise adoption across sectors. Businesses are using tablets to automate processes and take advantage of AI-powered analytics in sectors like fieldwork, logistics, healthcare, and retail where mobility and wireless connectivity are critical. This trend enhances operational efficacy, decision-making, and real-time responsiveness in smart city settings.
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As per the smart cities market regional analysis, due to federal initiatives, 5G rollouts, and sustainability objectives, North America remains the global leader in the adoption of smart cities. Both the US and Canada invested heavily in AI-based infrastructure and smart transportation in 2024. The Biden administration received USD 1.5 billion from the Smart Infrastructure Act to enhance energy and traffic efficiency. The extensive use of smart lighting, EV infrastructure, and IoT-enabled municipal services has sparked private-public partnerships that accelerate cities' digital transformation.
The U.S. has integrated artificial intelligence (AI) and the Internet of Things (IoT) into its energy, transportation, and emergency response systems. An AI traffic system in Los Angeles reduced traffic by 28% in 2025 by using predictive algorithms and networked cameras. By installing smart trash cans with fill sensors, New York City increased garbage collection by 20%. Cities were assisted in digitizing federal funds from the Infrastructure Investment and Jobs Act, particularly in mid-sized communities that prioritized environmental sustainability and climate change preparedness.
The foundation of Canada's smart cities is a digital agenda that prioritizes residents and climate goals. An AI-powered smart grid trial program was introduced in Toronto in 2024, and in a few chosen locations, it reduced energy consumption by 15%. Demand-based routing and real-time tracking are now features of Montreal's intelligent public transportation system. The Canadian Infrastructure Bank provided USD 500 million to support sustainable energy, smart water management, and digital infrastructure to encourage local governments to employ data-driven urban planning techniques.
Under the EU Green Deal and the Digital Europe Program, Europe is developing smart cities. People will have control over their digital lives in these eco-friendly cities. In 2025, the EU Mission for Climate-Neutral and Smart Cities will be awarded grants to more than 100 European cities to develop AI-powered energy, transportation, and waste management projects. The region links government, healthcare, and transportation platforms for real-time urban optimization, with an emphasis on ensuring that they can collaborate and protect citizens' privacy.
The UK's smart cities are powered by energy efficiency and digital governance. AI-powered energy monitoring systems were installed in public buildings in Manchester and Bristol in 2024. This resulted in an 18% reduction in operating expenses. To reduce air pollution and manage traffic, London expanded its smart mobility network with 5G support and implemented data analytics. Local councils were encouraged to digitize public services by the UK government's Euro 200 million Smart Infrastructure Pilot Fund, which promoted sustainability and cost savings.
Protecting the environment and promoting sustainable mobility are the two main objectives of France's smart city initiatives. When AI was added to Paris' public bike-sharing program in 2025, it reported a 30% increase in use and a decrease in traffic. To help workplaces and schools use less electricity, Lyon tested smart energy solutions that use building sensors. Through data-driven urban development, the French government hopes to use digital twins in city planning to assist cities in meeting their carbon neutrality goals.
New concepts in energy efficiency, mobility, and the Internet of Things in industry are driving the smart city movement in Germany. In 2024, Berlin implemented AI-powered street lighting, which resulted in 40% lower electricity consumption in test districts. Using real-time IoT sensors and digital twins, Hamburg enhanced its smart port operations and logistics. More than 70 communities receive funding through the federal Smart Communities Model Projects (Modellprojekte Smart Cities) initiative. It focuses on safe, scalable, and citizen-driven urban digitization.
Asia-Pacific is rapidly expanding its smart city infrastructure due to new ideas, government regulations, and population growth. For 2024–2025, nations like South Korea and Japan prioritize AI, 5G, and smart transportation. Digitizing infrastructure and ensuring its longevity were the main drivers of the region's more than USD 140 billion in smart city investments. The need for new urban solutions that make use of self-driving cars, real-time analytics, and green construction technology has increased as megacities and smart manufacturing centers appear.
With Songdo and Sejong as its premier AI-powered cities, South Korea is a global leader in smart city innovation. By implementing self-driving buses that were linked to 5G traffic management systems, Sejong was able to reduce travel times by 20% in 2025. From 2024 to 2026, the government set aside 3.7 trillion, or roughly USD 2.8 billion, for smart city research and development. The world standard for smart urban development is set by South Korea's face recognition transportation systems, smart grid, and AI healthcare.
The main goals of Japan's smart cities are disaster preparedness, green energy, and assisting the elderly. The Fujisawa Sustainable Smart Town expanded in 2024 with the addition of AI-controlled solar energy and senior telemedicine services. Tokyo improved its preparedness for disasters by utilizing digital twins and AI-based evacuation planning. To make city life more modern, Smart City Public-Private Partnerships (PPP) in Japan are assisted by the Ministry of Land, Infrastructure, Transport, and Tourism in utilizing real-time data platforms and the Internet of Things (IoT).
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Government Funds and Initiatives
More People Want Cities and Infrastructure to Expand
Expensive Capital Expenditures and Protracted ROI Cycles
Concerns Regarding Cybersecurity and Data Privacy
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There is intense competition in the smart cities sector. ABB Ltd., AT&T Inc., AVEVA Group plc, and Cisco Systems, Inc. are the top three companies with a significant 32% market share. Price changes, technological developments, and regional expansion are some of the ways that market participants compete with each other. Competition has increased as a result of the growing need for high-speed internet access as well as the broad use of IoT, AI, 5G, and edge computing. Companies are focusing on developing AI smart city solutions that improve security, lower latency, boost power efficiency, and further integrate R&D. As smart cities incorporate more IoT, blockchain, big data, and cloud services, competition is growing because cities rely so heavily on state-of-the-art tech infrastructure.
SkyQuest’s ABIRAW (Advanced Business Intelligence, Research & Analysis Wing) is our Business Information Services team that Collects, Collates, Correlates, and Analyses the Data collected by means of Primary Exploratory Research backed by robust Secondary Desk research.
As per SkyQuest analysis, the global smart cities market is changing significantly as cities are mushrooming with population, technology is advancing, and governments are enacting regulations to support smart cities. AI, the Internet of Things (IoT), and digital twin technologies provide progress in strength, sustainability, and efficiency of combined city structures. High capital costs and privacy issues are still significant challenges; however, innovation and collaboration across many sectors are catalyzing acceleration. Real-life installations in Singapore, New York, and Paris have demonstrated measurable improvements in public safety, energy consumption, and transportation. These examples demonstrate that smart cities have long term viability as a global necessity.
| Report Metric | Details |
|---|---|
| Market size value in 2024 | USD 804.88 Billion |
| Market size value in 2033 | USD 3680.43 Billion |
| Growth Rate | 18.4% |
| Base year | 2024 |
| Forecast period | 2026-2033 |
| Forecast Unit (Value) | USD Billion |
| Segments covered |
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| Regions covered | North America (US, Canada), Europe (Germany, France, United Kingdom, Italy, Spain, Rest of Europe), Asia Pacific (China, India, Japan, Rest of Asia-Pacific), Latin America (Brazil, Rest of Latin America), Middle East & Africa (South Africa, GCC Countries, Rest of MEA) |
| Companies covered |
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Table Of Content
Executive Summary
Market overview
Parent Market Analysis
Market overview
Market size
KEY MARKET INSIGHTS
COVID IMPACT
MARKET DYNAMICS & OUTLOOK
Market Size by Region
KEY COMPANY PROFILES
Methodology
For the Smart Cities Market, our research methodology involved a mixture of primary and secondary data sources. Key steps involved in the research process are listed below:
1. Information Procurement: This stage involved the procurement of Market data or related information via primary and secondary sources. The various secondary sources used included various company websites, annual reports, trade databases, and paid databases such as Hoover's, Bloomberg Business, Factiva, and Avention. Our team did 45 primary interactions Globally which included several stakeholders such as manufacturers, customers, key opinion leaders, etc. Overall, information procurement was one of the most extensive stages in our research process.
2. Information Analysis: This step involved triangulation of data through bottom-up and top-down approaches to estimate and validate the total size and future estimate of the Smart Cities Market.
3. Report Formulation: The final step entailed the placement of data points in appropriate Market spaces in an attempt to deduce viable conclusions.
4. Validation & Publishing: Validation is the most important step in the process. Validation & re-validation via an intricately designed process helped us finalize data points to be used for final calculations. The final Market estimates and forecasts were then aligned and sent to our panel of industry experts for validation of data. Once the validation was done the report was sent to our Quality Assurance team to ensure adherence to style guides, consistency & design.
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With the given market data, our dedicated team of analysts can offer you the following customization options are available for the Smart Cities Market:
Product Analysis: Product matrix, which offers a detailed comparison of the product portfolio of companies.
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