Smart cities: turning connected technology into economic opportunity

Often associated with cutting-edge technology, connected infrastructure and highly ambitious sustainability targets, smart cities sit at the pinnacle of urban development. And, according to new research from JLL, they may be a just as fundamental economically as they are experientially.

Matthew Marson, Managing Director, and Ibrahim Yate, Research Director at JLL Technologies have published a new research report, Smart cities, smart investment?, which examines seven smart city technology applications across five global cities: London, New York, Dubai, Riyadh and Hong Kong. Using a consistent approach to evaluate costs, returns and the wider economic benefits of each city, the study highlights the significant opportunity available when technology investment is bespoke tailored to geographical needs.

The value behind a vision

The numbers make a compelling case. JLL’s modelling suggest that returns on investment can range from around 70% to a notable 300%, depending on the technology and its location. In London, the research underscored that scaled smart city solutions in the capital over a ten-year period could increase the city’s GDP by 0.8%, the equivalent to $8 billion. The story was similar in Dubai and Riyadh, with the former looking at a potential uplift of 6% ($6.9 billion equivalent) and the latter 3% ($16 billion equivalent).

The figures highlight that looking beyond the immediate cost of new technology, can create larger pools of opportunity amongst local businesses, workers and communities.

No one-size-fits-all solution

However, there is no universal formula for a successful smart city. And, the most effective investments often depend heavily on the specific challenges each city faces.

In London and Hong Kong, where energy costs and pollution are cited as significant concerns, technology that improves building efficiency can assist in reducing not only operating costs, but the environmental footprint of the building. While, in Dubai and Riyadh, prioritising air conditioning systems could deliver substantial savings, all also creating more comfortable environments for employees or clients.

Moreover, in New York, improving the efficiency of transport hubs could help cut both commuting time and friction, aiding in employees spending less time travelling, and more time working or enjoying the city itself; reinvesting their disposable income back into the city.

This trickle-down effect can be optimised to the specific spheres of the local economy that matter most to its population; such as productivity, whereby less friction points in the workplace and more agile operations cut down on inefficient use of time or health, whereby healthier indoor environments reduce sickness and encourage socially beneficial use of local amenities.

Striking the right balance

The research does highlight the balancing act between projects and their different financial payback periods. Digital improvements associated with transport tend to show quicker returns on investment, while investments into building systems and construction technology signal a longer period to pay themselves back. Combining both those shorter-term wins, with longer-term investments, can help to manage the risk however, while building lasting value.

For city leaders and investors, the message is abundantly clear; success depends on identifying local priorities, setting measurable economic goals and ensuring projects are scaled beyond just individual buildings or pilot schemes.

Ultimately, smart city investment has the potential to deliver benefits that extend far beyond the technology itself. From more ecologically mindful buildings to healthier indoor environments and happier workforces, the real value of smart cities lies in their potential to shape a more sustainable, prosperous future for generations to come.

Read JLL’s full report, Smart cities, smart investment? here.