Spending on smart city initiatives will increase at 18.9 percent to nearly $124 billion in 2020, according to a new forecast from the International Data Corporation (IDC).
The top 100 cities investing in smart initiatives in 2019 represented around 29 percent of global spending.
The Spending Guide for more than 200 cities shows that fewer than 80 cities are investing over $100 million per year. Around 70 percent of the opportunity lies within cities that are spending $1 million or less per year.
“There is a great opportunity for providers of smart city solutions who are able to leverage the experience gained from larger projects to offer affordable smart initiatives for small and medium sized cities,” Serena Da Rold, program manager in IDC’s Customer Insights & Analysis group, said.
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 percent and 14 percent of overall spending respectively.
Smart grids (electricity and gas combined) attract the largest share of investments, though 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.
Singapore will be 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.
United States, Western Europe, and China will account for more than 70 percent of global smart cities spending throughout the forecast. Latin America and Japan will experience the fastest growth in smart cities spending in 2020.
Many are moving to incorporate Smart City use cases into budgets, or financing efforts through more traditional means. This is helping to grow investments, Ruthbea Yesner, vice president of IDC Government Insights and Smart Cities and Communities, said.