Smart Cities Market Size – By Component, By Technology, By Application, By Solution– Global Forecast, 2025 – 2034

Smart Cities Market Size

The global smart cities market size was valued at USD 634 billion in 2024 and is estimated to grow at CAGR of 15.8% to reach USD 2.74 trillion by 2034. Urbanization and technological advancements drive smart city growth and connected devices, and government initiatives and funding accelerating smart city development.
 

The smart city initiatives aim at improving the quality of urban life and ensuring sustainable development through advanced technologies like AI, big data, and the internet of things. These smart technologies tackle the critical issues of substandard living and housing conditions, housing shortages, dire resource allocation, ever-increasing traffic congestion, increasing crime rates, and inadequate overall infrastructure. Along with improving services, technology is also assisting in urban planning and other public services, traffic management, infrastructure maintenance, strategic planning, and more. Moreover, the technologies incorporated into smart cities also significantly improve the time to problem resolution.
 

Simultaneously, government policies and sponsorships are claiming to fuel the growth of smart cities across the globe. India’s Smart Cities Mission, Europe’s Horizon 2020 and United States’ Smart Cities and Communities initiative are all attempting to promote public private partnerships (PPPs) and other forms of innovation at the municipal level. These programs assist in funding and creating enabling policies for swift smart city assimilation.
 

With deployment of investment enabling policies in smart technologies, the urban areas are ensured to be responsive to the changing demands, economically productive, and improve the lived experience of the residents. For example, in December 2024, the Indian government made an announcement claiming the accomplishment of the Smart Cities Mission (SCM) in India, which was initiated in 2015.
 

The Smart Cities Mission (SCM) accomplished 91% project completion and USD 17.2 billion was spent on the infrastructure. It aims at the urban socio-economic development and the governance and administrative servicing of rising cities through Area-Based Development and Pan-City Projects. This government initiative and funding presented by the government cited are some of the principal drivers of growth for the market, Economic growth, inclusivity and innovation are advanced in urban regions.
 

Smart Cities Market Trends

• One of the key trends significantly impacting the smart cities industry is the Smart management and maintenance of resources such as traffic, electricity, smart waste management, and grid systems are made possible through AI-analytical systems and Smart IoT infrastructure that provides real-time updates and predictive maintenance services.
   
• 5G network technology has improved connectivity for all smart city applications, while autonomous transport systems and emergency response systems benefit from edge computing due to lower latency for essential functions.
   
• Municipalities and governments are adopting more energy-efficient approaches with smart grids and green buildings, as well as electric vehicle infrastructures as a means to combat urban pollution and achieve carbon neutrality targets.
   
• The large-scale implementation of smart city technologies is made possible through the increasing partnerships between government authorities, technology providers, private investors, and other stakeholders, making advancements in smart urban transportation, security, and urban planning.
   

Smart Cities Market Analysis

Based on Technology, the market is segmented into hardware, software and services. The hardware is expected to grow significantly owing to the increase in applications such increased deployment of IoT devices, 5G infrastructure expansion, and growth in smart grids & energy management.
 

• The Hardware segment dominated the market accounting for USD 274.1 billion in 2024. Growth in the hardware segment of the market is propelled by the surge in the use of IoT devices, sensors, smart meters, and even whole systems in cities. The deployment of 5G networks alongside edge computing is also increasing the amount of equipment needed like small cells, routers, and gateways that are essential for the smooth functioning of smart applications.
   
• Software segment will grow at a CAGR of 17.6% during the forecast period. The Software segment is also important for the infrastructure of smart cities with AI and other data techniques enabling decision making processes along with monitoring in real time. Work of a digital twin alongside cloud platforms and urban management powered by AI is increasingly being adopted to manage a city from traffic control to energy optimization.  
   

Based on smart mobility, the smart cities market is segmented into IoT, AI & ML, cloud computing, 5G networking, edge computing and others.
 

• The IoT segment dominated the market accounting for USD 166.8 billion in 2024. The growth in smartphone adoption worldwide as well as penetration of high-speed internet connectivity is expected to drive the growth of Smart citiess for smartphone applications.
   
• AI & ML segment will grow at a CAGR of 17.6% during the forecast period. Enterprises are increasingly using tablets for fieldwork, logistics, healthcare, and retail operations where mobility and wireless connectivity are important.
   

Based on smart healthcare, the smart cities market is segmented into transportation, waste management, energy management, utility management, public safety, environmental monitoring and others.
 

• The transportation segment dominated the market accounting for USD 148.8 billion in 2024. The use of IoT, AI, and 5G technologies are enhancing mobility in urban areas, and as a result, the transportation segment in the market is growing rapidly. Enhanced smart traffic management systems, proactive public transit monitoring, and advanced parking systems are further optimizing traffic congestion.
   
• Public safety segment will grow at a CAGR of 19% during the forecast period. AI driven surveillance and urban policing is being advanced with the integration of AI real-time crime detection and emergency response intelligence systems. Smarter policing is enabled by smart surveillance cameras with facial recognition, gunshot detection sensors, and predictive policing analytics making law enforcement more streamlined and efficient.
   

Based on solutions, the smart cities market is segmented into smart governance, smart economy & development, smart transportation, smart monitoring & control, smart healthcare, smart & sustainable environment and others.
 

• The smart transportation segment dominated the market accounting for USD 161.3 billion in 2024. The development of smart transportation systems is escalating as cities incorporate mobility technologies to improve traffic issues, maximize efficiency, and enhance the commuting experience. Primary players facilitating advancements in this field are the AI-powered traffic management systems, V2I systems, and the charging infrastructure for electric vehicles.
   
• Smart healthcare segment will grow at a CAGR of 16.9% during the forecast period. Smart Healthcare System is an evolution in the field of urban healthcare services, incorporating diverse technologies of digital health through telehealth and AI-based diagnostics. The accessibility and efficiency of healthcare services are being enhanced by increasingly advanced smart wearables, remote monitoring systems, and AI-powered predictive analytics.
   

The U.S. smart cities market is projected to grow significantly, reaching over USD 1.07 trillion by 2034. U.S. cities are adopting smart technology at an accelerating rate due to considerable spending in the New York, Chicago and San Francisco IoT, AI, and 5G infrastructure sectors. Venture partner funds, along with businesses like Microsoft and Google, are targeting smart highways, automated building management systems, and cybersecurity. Adoption of autonomous and electric vehicles is also accelerating the development of smart mobility systems, while sustainability initiatives are increasing the deployment of intelligent grids and renewable energy resources.
 

Germany smart cities market is expected to witness robust growth, with a CAGR of over 15.2% by 2034. Germany is one of the top countries in Europe. The government has been supporting the development through the “Smart Cities Model Projects” program. The country is also well known for its emphasis on sustainability, which is why smart energy controls, digital twins, and intelligent transportation planing are also being developed. Berlin and Hamburg are at the forefront within Germany for implementing AI-based traffic control systems, self-driving public transport, and integration of green infrastructure systems in support of the carbon neutrality goals.
 

The market in China is expected to experience significant growth with a CAGR of 17.9% by 2034. China leads the world in the development of smart cities as it automates urban management with Artificial Intelligence, smart surveillance, and digital governance. Shenzhen and Shanghai are increasing efficiency through the IoT, 5G, and smart energy grids. Its advancements in the use of cashless payments and facial recognition technology, as well as the monitoring of city vital systems, substantiated through strong public-private partnerships deem the country a benchmark for digital urbanization.
 

Japan smart cities market is set to grow significantly, with projections indicating it will exceed USD 207.7 billion by 2034. In Japan, projects towards developing smart cities are aimed primarily towards fostering robotics and automation, applying sustainable development principles as seen in big projects in Tokyo, Osaka, and Fukuoka. The use of Artificial Intelligence, Internet of Things, and 5G technology seeks to improve disaster resilience, aid for the elderly, and energy consumption management. The country seeks to secure the attention of the autonomous mobile, smart healthcare, and e-governance systems in order to build cities adaptable to the future that do not compromise on social equity alongside environmental sustainability.
 

The South Korea market is anticipated to grow at a CAGR of over 16.2% by 2034. The advancement of smart cities in South Korea has been achieved through the high-tech urban planning of 5G infrastructure systems along with the intelligent transportation systems. South Korea has also included AI public services, self-driving vehicles, and advanced power networks into public infrastructure, which makes these cities connected and intelligent. Supported by government policies, South Korea, with the help of its private technological giants such as Samsung and LG, is at the forefront of mobility and spacial digital twins artificial intelligence and automated construction systems to improve living standards.
 

Smart Cities Market Share

The smart cities industry is highly competitive. ABB Ltd., AT&T Inc., AVEVA Group plc. and Cisco Systems, Inc. are the top 3 companies accounting for a significant share of 32% in the market.  The players in the market compete with each other through technological innovations, price changes, and expansion into new regions. The competition is escalated due to the increased need for high speed internet access, ubiquitous IoT adoption, AI, 5G, and edge computing. Companies are focusing their resources into developing AI smart city solutions that improve power efficiency, decrease latency, strengthen security, and other features by further integrating R&D. Increasing competition is driven by the higher integration of smart cities with IoT, blockchain, big data, and cloud services because cities rely greatly on advanced tech infrastructure.
 

Well known firms are switching to liaisons with local governments, tech vendors, and city planners for faster adoption of advanced infrastructure like intelligent transport, smart grids, and connected urban public services, as well as eco-friendly design integrated sustainable infrastructure. The competition of the concerned market is defined through management of urban resources and energy within a city alongside promoting its efficiency under the enhanced security and defense systems making a firm better evolved smart city ecosystems.
 

ABB is a dominant player in the smart cities market, particularly in urban infrastructure and smart grid solutions. The company's strategy involves technological advancements through research and development, strategic partnerships, and collaborations to maintain its leading position.   For instance, in December 2021, ABB has partnered with Indore Smart City Development Limited (ISCDL) to deploy next-generation digital technology that enables the continuous supply of electricity to homes and businesses. In the first phase of the collaboration, this technology has enabled more than 2300 connections to achieve 24/7 electricity supply with an efficient automatic response system (ARS) in case of power outages or disruption.
 

Sony Group Corporation is a dominant player in the market, particularly in smart imaging, entertainment, and AI-driven sensor technologies. The company's strategy involves technological advancements through research and development, strategic partnerships, and collaborations to maintain its leading position. For instance, in March 2024, Sony Semiconductor Israel announced the commercial availability of its advanced Wireless system-on-hip (SoC) module, the ALT1350. The LPWA cellular modules were designed in collaboration with industry members including AM Telecom, Fibocom, Murata, Quectel, Semtech, Telit Cinterion and Wistron NeWeb Corporation (WNC).
 

Smart Cities Market Companies

List of prominent players operating in the smart cities industry include:

• ABB Ltd.
• AT&T Inc.
• AVEVA Group plc.
• Cisco Systems, Inc.
• Ericsson
• Fujitsu Limited
   

Smart Cities Industry News

• In February 2023, NEC Corporation India, announced the launch of enhanced technology solutions as part of the Global Smart City Suite that includes NEC Mi-Command (Integrated Command and Control Centre), NEC Mi-City (Citizen Engagement Portal), NEC Mi-Eye (Intelligent Video Analytics), and NEC Mi-WareSync (Warehouse Management System).
   
• In November 2024, L&T Technology Services Limited announced a strategic collaboration with the Colorado Smart Cities Alliance (CSCA). This partnership aims to drive innovation and technology integration in smart city development projects across the state of Colorado.
   

The smart cities market research report includes an in-depth coverage of the industry with estimates and forecast in terms of revenue (USD Million) from 2021 – 2034 for the following segments:

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Market, By Component

• Hardware
• Software
• Services

Market, By Technology

• IoT
• AI & ML
• Cloud computing
• 5G networking
• Edge computing
• Others

Market, By Application

• Transportation
• Waste management
• Energy management
• Utility management
• Public safety
• Environmental monitoring
• Others

Market, By Solution

• Smart governance
• Smart economy & development
• Smart transportation
• Smart monitoring & control
• Smart healthcare
• Smart & sustainable environment
• Others

The above information is provided for the following regions and countries:

• North America 
  • U.S.
  • Canada 
• Europe
  • Germany
  • UK
  • France
  • Spain
  • Italy
  • Netherlands 
• Asia Pacific
  • China
  • India
  • Japan
  • Australia
  • South Korea 
• Latin America
  • Brazil
  • Mexico
  • Argentina 
• Middle East and Africa
  • Saudi Arabia
  • South Africa
  • UAE