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Smart City: Crucial Advantages and Disadvantages

A smart city is one of the mega-trends that is going to transform the way we live and work on a daily basis. 

Thanks to new technological inventions, the cities we live in are getting more and more efficient. Especially with the growing population and urbanization, it is crucial for these dense areas to find effective solutions for today’s challenges.

Whether it is the usage of resources, waste management, public transport, infrastructure or the buildings themselves, smart technologies and the Internet of Things (IoT) can have a positive impact on them. Many cities call themselves “smart” nowadays, but this trend does not only come with upsides. 

In the following article, we will show you the smart city advantages and disadvantages that are crucial for the future of urban living and sustainability.

Pros and Cons of a Smart City


  • Sustainable Usage of Resources
  • Better Transportation
  • Improved Infrastructure
  • Safer Cities
  • More Efficient Public Services
  • More Job Opportunities


  • Data Security Concerns
  • Privacy and Social Control
  • Early-Stage Business Models
  • Lack of Skilled Workers and Professionals
  • High Investment Necessary

What is a Smart City?

A “Smart City” is the concept of using modern technologies such as the Internet of Things (IoT), Artificial Intelligence (AI) and Machine Learning (ML) to make cities and towns more efficient and sustainable in regards to the environment, society and economy. They try to solve problems related to the increasing population, health, climate change, pollution, housing, work, and living conditions.

large highway intersection

Advantages of a Smart City

There are numerous advantages to the implementation of a smart city with modern technologies that can benefit its citizens and the environment to a large extent. 

Sustainable Usage of Resources

Smart cities improve the usage of resources such as electricity or water by predicting their demand. Thanks to sensors that are installed inside commercial and residential buildings, like smart meters, central management systems can analyse the amount of energy consumed. This data can then be analyzed to predict patterns and demand, thus limiting wasted resources.

In addition, air quality sensors, renewable energy sources, and green spaces improve the urban environment even more. 

Better Transportation

Transportation can be made more efficient by using connected traffic management systems and new types of mobility. Trains, trams, buses or taxis can inform citizens of precise arrival times and delays. This means that people will waste less time waiting for transportation. 

Another advantage is the development of new types of mobility such as shared vehicles (cars, bikes, e-scooter). They can help to reduce the number of cars on the street and improve the flow of traffic.

Improved Infrastructure

Infrastructure, such as streets, bridges and buildings can be made safer and cheaper to keep running. With sensors installed throughout the structure and AI data analysis, maintenance issues can be predicted even before they occur. These problems can then be repaired or rebuilt without any serious damage happening to the infrastructure or even the citizens. 

Our Book Recommendation For This Topic

“Smart Cities: Introducing Digital Innovation to Cities” explains the importance of smart cities and the connection to sustainability. The book provides you with extensive information about the challenges of urban areas and how a smart city might be able to solve these. Every element of these cities is explained in detail, including different business models and types of management. To make it easier to understand, the authors provide case studies for various smart cities.

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Safer Cities

A smart city will be a safe place to live in. Intelligent lighting systems will help to keep unsafe areas like parks, train stations, or side streets bright in order to reduce the likelihood of criminal activities. 

Also, smart cameras and CCTV are always keeping an eye on the public. In combination with face recognition and AI image processing, they are able to alert the police, fire department or police when recognizing an incident.

More Efficient Public Services

Public services can be digitized and made more efficient. There will be no need to go to any governmental offices to request documents or services. One example is the issuance of land titles by using blockchain technology. Blockchain is able to make this process safer and faster by storing the information on a decentralized database that cannot be manipulated.

More Job Opportunities

With new technologies, skilled people are needed to run and implement the smart city. This will allow for more job opportunities to arise and unemployment rates to lower. Another factor is the improved network and internet connection which helps more people to have access to resources for education and work.

Disadvantages of a Smart City

Despite the fact that the advantages have a high impact on an urban area, a smart city also comes with some downsides that should not be ignored.

Data Security

An important issue for a smart city is the secure management of sensitive information. In order to make efficient decisions and predictions, many different types of information have to be collected. Whether it is building data like energy consumption and occupation, or personal data such as CCTV recordings and travel information.

In order to gain trust from its citizens, the local government of the smart city has to prove that they are able to handle this information with the highest level of security. They also need to be able to withstand any type of cyber attack.

Privacy and Social Control

Privacy is also a big concern since data is being collected about a person by security cameras and information is shared about private buildings. It is also important who is handling the private data, as this authority might have much control over public opinions and decisions.  

Early-Stage Business Models

Most companies that are operating in the smart city sector are still relatively new. That’s why some business models are not tested sufficiently or have not shown the ability to generate profits. Even though many cities are funding these startups with high amounts of capital, it is necessary for them to create a business that can sustain the future.

Lack of Skilled Workers and Professionals

In order to run the smart city, skilled workers and professionals are required. Since most of these new technologies just came to market, there are still not enough people available. Training and educational programmes have to be made available in order to share knowledge with potential employees but also the local government and even its citizens. 

High Investment

Many buildings have to be renovated or refitted with IoT sensors and a high-speed internet connection. Public transport and infrastructure need to be equipped with smart technology as well in order to make the concept of a smart city work. All of these improvements will come at a high cost and cities need to be aware of what is necessary to really transform their urban area.

The Top 3 Smart Cities and Why They Succeeded

There are a number of cities that put a large focus on smart technologies. They are able to achieve great progress and benefit citizens, as well as businesses. 

We will take a closer look at the top three smart cities, to show how the advantages but also disadvantages are applied to the real world. According to the IESE Cities in Motion Index from 2022, the current smartest cities are London, New York, and Paris.

In the following section of this article, you will understand how these cities work, why they are smart, and how they became so successful.

1 | London, United Kingdom

London is the capital of the United Kingdom and also the smartest city in the world. 

It was able to gain the top spot thanks to a thought-through strategy that focuses on every aspect of a smart city. Sadik Khan, the mayor of London, has created the “Smarter London Together” initiative that provides aims and requirements for a smart city.

A large focus lies on improving the traffic system of the city, as well as decreasing congestion. Some technologies that have been implemented already are the congestion charge, contactless payment, and an ultra-low emission zone. Cameras and sensors are used to collect the data to control the cars entering these specified zones. 

To encourage walking in the city, an app was launched to showcase walking routes throughout London. The overall goal is to have 80% of journeys by foot, bicycle, or public transport

Additionally, London promotes businesses that engage in the smart city sector. A large amount of city data is available for use to develop new solutions and technologies.

2 | New York City, United States

Another major city that has invested a lot in smart technologies is New York. It is by far the most populated city in the United States and therefore must solve a lot of problems and challenges.

One major problem is the environmental sustainability and health of citizens. To improve this aspect, new york launched the Smart Cities Programme. Over 600 government buildings have been upgraded with LED lighting systems to save energy. Furthermore, smart meters were installed in numerous residential and commercial properties to control and maintain a sustainable level of water consumption. In case a leakage might appear, the sensors can inform local residents.

To improve the city even more, air-quality sensors are placed throughout New York to monitor and improve the air. This technology works hand-in-hand with a traffic control system that optimizes the flow of cars, public transportation, and other participants.

Similar to London, an initiative has been launched to fund businesses that are working in the smart city sector. The Smart Cities Innovation Partnership supports new technologies that can improve the city with up to $1 million.

3 | Paris, France

The third smartest city in the world, according to the IESE Index, is Paris. 

France’s capital has progressed towards a smart and sustainable metropolitan area. Especially due to the lack of green spaces, low air quality, and high congestion, a change was more than necessary.

To improve air quality, electric cars are being promoted, as well as the use of public transportation. An induction charging system has been tested by Renault to make the process of charging cars easier and more convenient. In addition, Paris is set to be transformed into a 15-minute city. This means all essential amenities and services can be reached by a walk of 15 minutes.

Paris has also upgraded their traffic management system and wants to make the city greener. They created the largest urban farm and are planning to make space for more parks, as well as roof gardens.


A smart city offers many advantages to its citizens, nature, as well as the economy. Modern technologies will be able to make it safer, healthier and more sustainable to live in an urban environment. 

But while it sounds good at first sight, there are some negative aspects that are important to keep in mind. Privacy will be largely affected by it and since it is quite a new concept, many business models are not yet proven to work. In addition, there is still a lack of skilled workers and knowledge.

If you want to learn more about the future of commercial real estate, including topics such as sustainability & ESG, PropTech, architecture, development and investment, feel free to take a look at our other articles on Smart CRE. Here you will also find insights into the job market and how to start a career in real estate.

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