IHS: Number of 'smart cities' to quadruple over 12-year period

Investments in smart city projects to surpass $12B in 2025


IHS Technology is forecasting that the number of “smart cities” worldwide will quadruple within a 12-year period (2013-2025) as local governments increasingly work with partners in the private sectors to address a number of challenges.

According to a statement from the market research firm, there will be at least 88 smart cities globally by 2025, up from 21 in 2013. Additionally, IHS said that annual investment on smart city projects reached slightly over $1 billion in 2013, but will surpass $12 billion in 2025.

"Smart cities encompass a broad range of different aspects, but IHS has narrowed the definition of the term to describe cities that have deployed—or are currently piloting—the integration of information, communications and technology (ICT) solutions across three or more different functional areas of a city," said Lisa Arrowsmith, associate director for connectivity, smart homes and smart cities at IHS. "These functional areas include mobile and transport, energy and sustainability, physical infrastructure, governance, and safety and security."

According to IHS, smart city projects are typically deployed via partnerships between the public and private sectors. The main business models include build-operate-transfer (BOT), build-operate-comply (BOC) and municipal-owned-deployment (MOD). IHS said that the most common model is BOT, where city planners work closely with an external private partner that, in turn, develops the services and deploys the necessary infrastructure. The third party is also responsible for the operation and continued management of the infrastructure, until such time when it is transferred back to the city. The BOC and MOD models, in comparison, assign varying levels of responsibility in the building, operation or maintenance of smart city projects for the public and private sectors that are involved in those works.

Additionally, IHS said that the Europe-Middle East-Africa (EMEA) region represented the largest number of smart cities in 2013, but that the Asia-Pacific region will take over the lead in 2025. In all, Asia-Pacific will account for 32 smart cities of the total in nine years’ time, Europe will have 31, and the Americas will contribute 25.

Click here for more information about the "Smart Cities: Business Models, Technologies and Existing Projects," report.