Global smart cities, including Riyadh, can unlock billions of dollars in economic value by treating their technology initiatives as a serious, high-performing investment class, rather than an experimental innovation spend, says a new report from JLL.
When evaluated with the same rigorous financial metrics as infrastructure or real estate, such as Net Present Value (NPV), Internal Rate of Return (IRR), and payback periods, smart city projects prove to be a compelling investment proposition and a high-performing asset class, the report says.
The report, “Smart cities, smart investments?”, establishes a direct link between technology deployment, financial returns, and city-wide economic growth. A key finding is that the largest economic benefits come from “GDP boosters”, or the indirect economic impacts from deployed technology. These have a multiplier effect from gains in commerce, development, health, productivity, and sustainability. These transform smart city technology from an operational upgrade to functioning infrastructure.
Crucially, the report finds that returns are hyper-local. A one-size-fits-all approach fails, as the greatest returns are unlocked when technology is chosen to solve a city’s unique challenges. In Riyadh, for example, the analysis identifies three top-priority use cases. These include AI energy analytics to cool buildings efficiently in the city’s hot and arid climate, smart construction to drive efficiency in infrastructure development, and intelligent street lighting solutions to optimize energy usage for new walkways and parking.
Dr Matthew Marson, Managing Director – EMEA & APAC, Technology Consulting at JLL, said: “Globally, the conversation around smart cities has been limited to their potential, framing these as a nice-to-have. Our data shifts that conversation to performance. The new study shows that smart technology generates measurable financial returns, can be deployed at scale, and solves real-world urban challenges, creating clear economic value for city planners, investors, and developers alike. Treating this technology as critical infrastructure transforms it into a mature asset class, backed by real, local demand that investors can act on.”
The report provides a detailed financial analysis for each technology use case in Riyadh, Saudi Arabia’s capital and central economic hub. Smart city investment is critical to realizing the ambitious goals of Saudi Vision 2030, and the analysis identifies a unique portfolio of technologies poised to support the capital's unprecedented development.
Balancing energy costs with comfort in Riyadh’s hot climate, AI Energy Analytics tops the use case list. It delivers over $1.8 billion in NPV with a rapid 4.9-year payback, the fastest return for this type of technology among the five global cities studied. This HVAC optimization can save 20% on annual operating costs, directly supporting the health and commerce GDP boosters.
Smart Construction is presented as an absolute necessity for managing the country’s ongoing development boom. With a projected NPV of over $3.8 billion over a 5.9-year payback period, these solutions are essential for minimizing waste and delays in meeting the city's ambitious growth targets.
Finally, Intelligent Street Lighting offers a compelling opportunity for optimizing pedestrian infrastructure across Riyadh’s many new developments. This use case delivers nearly $270 million in NPV in just 1.3 years, the fastest payback period of any technology analyzed in the report.
When applied to the specific challenges in each city, smart city technologies go beyond being a tactical, limited form of digitization and offer a means of stimulating economic growth and productivity gains at scale. Technology deployments can affect how efficiently buildings operate, how productively people contribute to an economy, how attractive a city is to investment, and how much unnecessary cost is removed from the wider system. Capitalizing on this multi-billion-dollar opportunity requires a fundamental shift in how regional stakeholders approach technology.
For city leaders, this means moving smart city budgets from IT procurement to core economic policy, backed by clear business cases and rigorous performance benchmarking. For regional investors, it opens up a resilient, institutional-grade asset class driven by concrete local demand. Developers and operators who integrate these intelligent technologies from the outset can secure the asset’s valuation, performance, and operational life.
To facilitate this shift, the report outlines a practical, five-step roadmap. It calls for leaders to define clear economic objectives and benchmark them against their city's unique profile, ranging from energy costs to population density. The next step is to select a balanced portfolio of technology projects that serve both investor and civic interests, using pilots to validate financial returns and scalability. Finally, to ensure long-term success, cities must institutionalize these capabilities, embedding data analytics, strategic review, and smart city policymaking into their core operations. – TradeArabia News Service
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