A new research report predicts that annual revenues from smart city projects will grow to nearly $89 billion by 2025. However, it found most smart city initiatives are focusing on solving peripheral issues, with few big projects tackling core city problems.

Navigant’s “Smart Cities” report, annual smart city revenue is expected to grow to $88.7 billion worldwide by 2025 from $36.8 billion in 2016.

“During the next two years, the adoption of smart city solutions is expected accelerate as the spread of the Internet of Things provides further momentum,” said the release.

“As city leaders around the world continue to commit to smart city objectives to meet social, economic, and environmental challenges, national governments are also encouraging cities to become centers of innovation and drivers of sustainable growth.”

Revenues driven from five key areas

The report examined growth of the smart market with a focus on five key industries that include government, buildings, energy, mobility and water. The study complied profiles of high profile smart city projects in regions throughout the world, comparing different smart city approaches.

The report found that smart city strategies are focusing increasingly on climate adaption and resilience. As well, they were putting more resources into improving the cities’ relevance to its citizens in their daily lives.

However, the report found that despite a proliferation of pilot programs and grand visions for the future, there were few ambitious smart city projects actively addressing the big issues in urban environments around the world. Specifically, the report identified a dearth of financially sound, large-scale smart projects that are attempting to solve core city issues that are holding back the evolution of future cities and how we live in them.

“Today, city leaders and suppliers are recognizing that there needs to be a more clear and timely route to the broader deployment of proven technologies and solutions,” said Navigant research director Eric Woods. “The question is how to establish the right business models and deployment strategies to enable this expansion.”