Smart cities market to reach US$1.5 trillion by 2020
In 2015 and beyond, the number and value of smart city initiatives will expand substantially, according to Monitor Deloitte’s new report “Smart cities, not just the sum of its parts”. The majority of new smart city projects globally will continue to be led by European cities and much of the expansion will occur in North American and advanced East Asian cities, followed by cities in the Gulf Cooperation Council (GCC) countries. An example of a smart city is Smart Dubai which was launched in March 2014 with the mission of making Dubai the smartest city in the world by 2017.
As “smart” technology proliferates around the globe, the movement within cities to apply these innovations to the most pressing problems has given rise to the concept of a “smart city” – a city which uses information and communication technology (ICT) to improve the sustainability and efficiency of the cities and its services. Despite this common theme, there is no widely accepted, authoritative definition of what constitutes a “smart city,” and the rules governing its use are ambiguous at best.
Although industry estimates as to the market value of smart cities vary greatly, the report from Monitor Deloitte which is Deloitte’s strategy consulting practice, predicts that the smart cities market will increase significantly over the next five years anywhere from over US$400 billion to over US$1.5 trillion by 2020.
“One of the most salient challenges for the development of smart cities is not the creation of new technologies, but changing the way that governments and organizations operate through technological innovation to make better, more efficient cities,” said Michael Romkey, Director at Monitor Deloitte in the Middle East. “The real benefit of smart cities is not the individual solutions, but the government-led creation of a holistic system where all solutions work together. Thus, smart cities need to make sure they build the right ‘soft’ infrastructure to underpin their smart solutions.”
In the Middle East, stakeholders are paying significant attention to the growing smart city industry and it is expected that new city sub-developments will incorporate elements of “smart” infrastructure. There have also been numerous smart city conferences in the last year, sponsored by both the public and private sectors. The region’s smart city growth will largely be driven by developments in the government planning, administration, and operations area, backed by significant GCC government investments in e-government and mobile services.
“Developers in the GCC are becoming increasingly interested in adopting the information and communication technology (ICT) infrastructure and master planning that will aid the development of modern smart cities. This presents key opportunities in both the private and public sector to leverage this trend and increase investment in new smart technology,” explains Romkey. “However, a greater emphasis must be placed on how to leverage these developments to ignite a shift to better, smarter cities.”