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Strategic Insights | Smart Cities

 

Five minutes into the future…

Imagine waking up in your fully Internet-enabled home, just a few years from now. Before you have even opened your eyes, a digital assistant has already gleaned weather information from sensors all over the city and determined how much your home needs to draw on a geothermal-powered district heating network to top up the amount of heat it already generates through photovoltaic panels on its roof. Then while you sip your high-protein shake, the same assistant serves you up a selection of news items that it knows you will be interested in based on your hobbies, shopping habits and various lifestyle choices you have made. Meanwhile, it is analysing data from traffic sensors and other people’s behaviour to work out the best time for you to leave for work. And of course, it will make minor adjustments to your regular itinerary based on any roadworks, extra heavy traffic, or any other unforeseen circumstances.

 

You decide you want to get an earlier EvoBus than usual, so you cycle to the bus station to save time.

 

Before you leave your home, you will have used an app on your phone to locate the nearest dock less e-bike. As you pedal, the GPS data trail that you generate is harvested by government agencies, marketing companies and researchers so that other transport services can be tailored to existing demand.

 

When you arrive at the bus station, advertising billboards identify you (or rather your phone) using Bluetooth-based proximity detection. They then tailor the adverts that they show you based on your Amazon purchase history, your Netflix viewing habits… or even any medical conditions that your smartwatch thinks you might be running the risk of contracting (because of your elevated heart rate or low blood oxygen saturation rate).

 

You board a hydrogen-powered zero-emissions bus and pay for your ticket by smiling at the bus pilot – facial recognition technology does the rest. Your journey to work only takes a few minutes, because that spatial mismatch whereby the majority of urban dwellers used to be left without easy access to employment as a result of increasing job sprawl and limited transportation options is a thing of the past.

 

The bus network itself uses data about how passengers use public transport so that its service really does meet their needs. The city is dotted with GPS sensors that improve urgent medical services. Connected traffic lights receive data from sensors and cars, adjusting cadence and timing to respond to real-time traffic, reducing road congestion. They can also detect ambulances and modify their operation so that emergency services can move through the city as quickly as possible. Connected cars can communicate with parking meters and electric vehicle charging docks and so direct drivers to the nearest available spot. Smart litter bins can automatically send data to waste management companies and schedule pick-ups as needed, as opposed to on the basis of a pre-planned schedule. And in this IoT-enabled city, your smartphone has completely replaced your wallet: it now contains your driver’s licence and ID card, as well as your cinema and theatre tickets, your travel card, and a means of payment.

 

In short, most cities of the future will be smart – they will leverage technology to maximise the efficiency of their services and address problems (such as maintenance or repair requirements) as quickly as possible. There will be less waste and inconvenience, improved social and economic quality and more social inclusion. With sustainability and citizen participation underpinning the whole concept, smart cities will be centred around the notion that people create the city, not the other way around.

 

Why do we need smart cities?

Urbanisation is a phenomenon without end. Today, 54% of people worldwide live-in cities, a proportion that’s expected to reach 66% by 2050. Combined with overall population growth, urbanisation will add another 2.5 billion people to cities over the next three decades. Environmental, social, and economic sustainability is a must to keep pace with this rapid expansion that is taxing our cities’ resources.

 

Although 193 countries agreed to the agenda for meeting the United Nations’ Sustainable Development Goals (SDGs) in September 2015, it is well known that centralised decisions and actions can take time. And… the clock is ticking.

 

There’s good news

Individuals and local authorities are more agile than governments and are better positioned when it comes to launching swift initiatives. Smart city technology is essential to meeting these goals, and as investors, we can be the power behind the punch that this technology can pack.

 

Many of the themed funds which Investment Quorum is currently researching are specifically geared towards capturing the benefits of the individual subjects which characterise the smart cities of the near-future – everything from clean energy and cloud computing to IoT-enabled transport infrastructure and telemedicine… indeed, many of the themes that we have discussed in our twice-monthly Strategic Insights articles. Our investment team is committed to seeking out and evaluating funds that will secure long-term capital growth for our clients by investing in companies around the world that are helping to develop the cities of tomorrow.

 

Generally, our focus is on funds that target three types of companies:

 

  • those building the city — companies involved in the design, planning and construction of tomorrow’s cities, with a focus on efficiency.
  • those running the city — companies that provide essential infrastructure and services for the day-to-day functioning of cities in a sustainable way.
  • and those living in the city — companies that offer services and solutions for 21st-century urban living, including housing, working and recreational activities.

 

Cities are having to adapt to manage rapidly growing populations while seeking to reduce their environmental impact. This is creating abundant investment opportunities for our clients. IQ believes that this emerging theme will offer an original investment proposition, against a backdrop of demographic change and catalysed by economic growth, growing awareness of the need for sustainability and technological progress.


Peter Lowman is the Chief Investment Officer at Investment Quorum, a Director of the company and an integral member of our investment committee.

This article does not constitute specific advice and investors should bear in mind that capital invested is not guaranteed. Investment Quorum is authorised and regulated by the Financial Conduct Authority.

If you would like to hear more about our wealth management services then please do not hesitate to call us on 0207 337 1390 or contact us via email. We would love to hear from you.

 

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