Global spending on smart cities initiatives to total nearly $124 billion in 2020

Global spending on smart cities initiatives is forecast to total nearly $124 billion this year, an increase of 18.9% over 2019, according to IDC.

smart cities spending forecast

The top 100 cities investing in smart initiatives in 2019 represented around 29% of global spending, and while growth will be sustained among the top spenders in the short term, the market is quite dispersed across midsize and small cities investing in relatively small projects.

Smart grids still attract the largest share of investments

In 2019, use cases related to resilient energy and infrastructure represented over one third of the opportunity, driven mainly by smart grids. Data-driven public safety and intelligent transportation represented around 18% and 14% of overall spending respectively.

Looking at the largest use cases, smart grids (electricity and gas combined) still attract the largest share of investments, although their relative importance will decrease over time as the market matures and other use cases become mainstream.

Fixed visual surveillance, advanced public transportation, intelligent traffic management, and connected back office follow, and these five use cases together currently represent over half of the opportunity.

The use cases that will see the fastest spending growth over the five-year forecast are vehicle-to-everything (V2X) connectivity, digital twin, and officer wearables.

Smart cities spending forecast: Top investors

Singapore will remain the top investor in smart cities initiatives. Tokyo will be the second largest spender in 2020, driven by investments for the Summer Olympics, followed by New York City and London. These four cities will each see smart city spending of more than $1 billion in 2020.

On a regional basis, the United States, Western Europe, and China will account for more than 70% of global smart cities spending throughout the forecast. Latin America and Japan will experience the fastest growth in smart cities spending in 2020.

“Regional and municipal governments are working hard to keep pace with technology advances and take advantage of new opportunities in the context of risk management, public expectations, and funding needs to scale initiatives,” said Ruthbea Yesner, vice president of IDC Government Insights and Smart Cities and Communities.

“Many are moving to incorporate smart city use cases into budgets, or financing efforts through more traditional means. This is helping to grow investments.”

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Global spending on smart cities initiatives to total nearly $124 billion in 2020