According to a recently published report by Grand View Research, the global smart cities market will hit $1.4 trillion in 2020, nearly triple the global market size of $568 billion back in 2013.

The main factors leading to this increase are the rapidly expanding population, speedy urbanization and industrialization.  Smart cities are designed and built to cater to a plethora of challenges and issues – including water management, energy management, urban mobility, street lighting and safety of the citizens.  Rapid growth is expected to occur in the smart city market, with an estimated annualized 13.6 % rise each year between 2014 and 2020.

One significant reason smart cities initiatives are being considered is to reduce the dependency on non-renewable resources for energy, as stated by the Globe Newswire. The most current technologies garnering headlines today are critical in the development of smart cities, including cloud computing, wireless communication, sensor networks and data analytics.

As well, smart security has a price tag of a potential $77.2 billion, due to increased cyber-theft. The smart security division is expected to see large gains of 14.8% annually from 2014 to 2020. As well, with the increasing need for integration of intelligent systems and communication infrastructure, industrial automation has projected gains sitting at a 14.4% annual growth rate.

Transportation segment leads the way

But the largest single segment was smart transportation, covering 16.1% of the market in 2013.  Increasing interest in transportation solutions including managing tickets, guidance systems, parking management, and managing traffic is expected to amplify the smart city market demand. Smart transportation is expected to grow at a projected growth of 15.2% annually over the next few years.

In 2013, North America led the global smart cities market, delivering revenues of $95 billion. Due to increased development of the transportation sector and water infrastructure, this key regional market is promising to show a rapid growth of 12.3% annually over the forecast period. Tight government regulations to reduce carbon emissions are expected to amplify this market’s demand.

In 2014, 21.7% of the market share was accounted for by the Asia Pacific countries, and it is expected to see major gains due to rising expendable incomes, better living standards and an ever-increasing population in the developing economies of the region.

The report noted the key vendors currently sitting at the top of the smart cities market include Honeywell, IBM, Oracle, Accenture, Cisco, Accenture, and Oracle.