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Markets & Geopolitics

Smart cities | Built by people for people

Interactions between governments and citizens, between citizens themselves and between individuals within organisations, such as employers, healthcare systems and educational institutions, all make up the life of a city.

Tony Mulhall, Associate Director, International Professional Standards, RICS
20 March 2018

Increasingly, big data can be used to glean greater knowledge of how cities function for their residents. Smart cities are where big data comes into its own.

Purpose-built smart cities have been conceptualised and constructed as new self-contained developments. This has been estimated to create a $3 trillion global business market over the next 20 years.

Depending on their locations and their primary sponsors, these cities will prioritise different aspects of smart enabling systems. Some will focus on the technologies themselves, while others focus on energy conservation or green city concepts. Those already promoted under the ‘smart city’ banner still largely emerge as real estate enterprises.

Smart city initiatives

Examples of smart city initiatives demonstrating varying degrees of success in meeting their original objectives include:

  • Songdo, South Korea was described in 2014 by its US developers as the largest real estate investment ($40bn) in the world. The Songdo International Business District, as it is now marketed, is constructed on the Incheon waterfront. Occupying 1,500 acres of reclaimed land and intended to accommodate 22,000 dwellings, as well as extensive commercial space, it was built as part of the drive to promote low-carbon and sustainable growth as the principal avenue for development in South Korea. Nevertheless, coinciding with the financial crash and despite considerable tax incentives, initial occupation has been slow. Started in 2003, work is not expected to be completed until the end of this decade. The city houses 40,000 people today and a further 50,000 commute to it from the surrounding area.

  • Masdar City, was conceived by the Abu Dhabi government in 2006 as part of a much greater project to transform the country from its oil based economy to one based on knowledge and innovation. Intending to be carbon neutral and emission free, the $22bn project was envisaged as being largely solar powered. Its original completion date was 2010, but the financial crisis and reformulated objectives have now pushed the completion date back to 2020/25. As designed, the city is intended to house around 40,000 people, but a weak market demand has slowed the project significantly.

  • Living PlanIT, Portugal was an initiative to create a smart city through models operating in the software industry not the real estate business. A collaboration between Living PlanIT, a software company, Cisco and the municipality of Paredes in Portugal, the intention was to provide an alternative to existing real estate models regarded as endemically wasteful. Living PlanIT’s model was to create an ecosystem of large and small company partners focused on creating products and services for sustainable urbanisation. In the aftermath of the financial crisis, the lack of ‘real estate’ finance was one of the main causes of delay.

Stand-alone smart cities for all their technological and environmental specifications are still fundamentally property investment undertakings. They are also still cities. Cities are built by people for people.

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