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A massive smart infrastructure boom could be about to kick off as cities face growing pressure to become more resilient in the wake of Covid-19. Combined with escalating sustainability commitments and the need to support ongoing population growth, Barclays believes the necessary changes will require "unprecedented urban investment and innovation." The firm said the impacts will be felt across ten sectors, encompassing everything from software to construction to utilities.
According to data from McKinsey, at least $3.7 trillion per year in infrastructure investment is needed from now until 2035 to support the expected growth of cities.
"It has never been more crucial for both existing and new cities to be made smarter, more efficient and sustainable," Barclays said in a recent note to clients. The firm believes that the post-coronavirus mindset, greater attention on sustainability, new funding incentives and the development of key technologies will drive change.
Using a broad definition for what constitutes a "smart city," and moving away from focusing solely on consumer-facing technologies, Barclays said investment opportunities lie in four key areas:
- Enabling technologies: 5G rollout, internet of things, etc.
- Building & construction: Intelligent building management systems, dynamic power consumption, etc.
- Energy: Smart grids, carbon management, etc.
- Waste & water management: Leakage detection, predictive maintenance planning, etc.
Ultimately, the firm believes smart cities have the potential to generate $20 trillion in economic benefits by 2026, $10 trillion of which will be from a multiplier effect.