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Research firm Frost & Sullivan has issued a new report analysing the global spending on smart cities technologies over the next five years.

The research firm forecasts an increase in spending on smart cities technologies of 22.7% between 2020 and 2025.

Smart cities’ spending on technology in the next six years is expected to reach $327 billion by 2025 from $96 billion in 2019.

Technologies like artificial intelligence and big data will be in high demand to combat the COVID-19 pandemic, with growing opportunities for crowd analytics, open data dashboards, and online city services.

Frost & Sullivan predicts that there will be more than 26 smart cities by 2025, with 16 in North America and Europe.

More than 70% of global smart city spending by 2030 will be from the United States, Western Europe, and China.

Smart cities in the US and Europe will continue spending on 5G and autonomous and robotic technologies. Almost all smart city projects in the US and Europe have already invested in open-data initiatives during the pandemic. In addition, China has renewed investments in 5G, smart grids, AI, data centers, and other smart city-related areas through the “new infrastructure initiative” introduced in 2018.

The growing demand for crowd management and monitoring in cities will lead the crowd analytics market to grow by 20%-25% by 2030. This sector had market revenues of $748.6 million in 2020.

Investments in smart initiatives are expected to rise over the next two years. Smart cities have already invested in contact tracing wearables and apps, open data platforms, autonomous drones, and crowd analytics to fight the pandemic. Post-pandemic, investment in smart projects like smart grids, intelligent traffic management, autonomous vehicles, smart lighting, e-governance services and data-enabled public safety and security will gain traction.

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The uncertain post-pandemic situation will compel cities to focus more on developing collaborative, data-driven infrastructure to provide appropriate healthcare facilities, as well as public security services. They will create significant business opportunities with a market value of $2.46 trillion by 2025.

Malabika Mandal, visionary innovation group industry analyst at Frost & Sullivan said: “Smart cities will focus on data-driven and connected infrastructure, which will lead to higher adoption of technologies like AI and 5G. They will prioritise more digitalised services and a strong data analytics infrastructure, leading to increased spending toward technology.” 

Archana Vidyasekar, visionary innovation group research director at Frost & Sullivan, added, “Now more than ever, the strategy of being technology-first, optimistic, and focused on ‘smart’ is critical. While COVID-19 has largely been a health crisis, it has disrupted city ecosystems and infrastructure tremendously. Smart technologies offer innovative solutions that can reverse the damage and bring some respite, if not normalcy. For instance, digital contact tracing can play a critical role in empowering citizens with knowledge of COVID-impacted areas and promote safer urban movement.”