Smart cities: Investing in the future

Making cities “smart” is the way of the future, but traditional infrastructure financing models may not work well to realise such a vision. How can cities navigate this new investment landscape?

Oct 30, 2018 | In partnership with the Economist Intelligence Unit
  • Cities need private investment to realise their smart city goals.
  • Given the nature of smart city projects and their payback periods, traditional infrastructure financing models may not work well.
  • Barriers to smart city creation and success will vary by market type; corruption may be an obstacle in emerging markets, whereas privacy may pose more of a problem in developed markets.
  • The return on investment and the definition of success may differ based on perspective: societal vs financial.

The term “smart cities” conjures visions of a future where digital technology monitors and connects everything from buildings to street lights to self-driving cars. It allows governments to provide better city services more efficiently, creating a more accessible, safer, cleaner and greener environment in the process. The city’s citizens are able to better utilise all the city has to offer, from the convenience of their smartphones. Most cities today are far from that vision but many are working towards it, both investing in smart infrastructure and creating ecosystems that allow urban innovation to flourish.

However, many cities, constrained by austerity, must look to the private sector to fund this development. Institutional investors, seeking yield and looking to meet their long-term liabilities, have long been touted as the ideal sources of funding for infrastructure, whether smart or not. So why isn’t that much-needed flood of investment happening?

Invesco has partnered with the Economist Intelligence Unit to produce a series of four articles examining these themes. In this lead report, we will examine the investment landscape for smart cities, and investigate the related opportunities and risks for investors.


To read more, click on “Download PDF”.

(This article, written by the Economist Intelligence Unit, examines the investment landscape for smart cities, and investigates the related opportunities and risks for investors. It is part of Invesco’s series of articles on smart cities.)

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