Next Stop: Smart City

German cities are keener than ever to get smart – especially in the wake of coronavirus – and this digitalization drive is creating real opportunity for foreign businesses. The government has pledged almost a billion euros for smart city projects over the next decade.

April 2021

When the first commercial flight departed from the new Berlin Brandenburg Airport in November, it spelled the end for the city’s beloved Tegel Airport as a transportation hub. But it also cleared the runway for a long-awaited smart city project.

The former airport and its environs are becoming the Urban Tech Republic, a research and industrial park with a university campus. It will include a fully networked, climate-neutral residential area, the Schumacher Quartier, where smart mobility concepts will be tested.

The Urban Tech Republic is just one of many smart city projects under way in Germany, touching every aspect of city life, from infrastructure and transport to schools and administration. And these developments are creating unprecedented opportunities for international entrepreneurs to help shape Germany’s future.

“Cities are always changing,” says Michael Pfefferle, an expert on smart cities at the German digital association Bitkom. “Smart cities are a new vision of cities that use data to make better decisions and improve the quality of life for people living there.”

It’s not about tearing everything down and building anew. By adding the latest technology to a city to collect and analyze data about how people really use their urban environment, it becomes easier to improve mobility, conserve energy, save money and resources, and streamline bureaucracy. Covid-19 has put much of the municipal status quo up for discussion, and niches are opening everywhere for forward-looking entrepreneurs and companies with smart concepts.

The Bottom Line

Germany’s cities are getting smarter by going digital in every possible way, creating new niche for nimble international entrepreneurs.

Hamburg leads the way

Which German city is winning the race to the future? According to Bitkom, which ranked the country’s smartest cities in 2020, Hamburg comes out on top by a big margin. “Hamburg is very strong in mobility and social efforts,” Pfefferle says, noting the city’s innovative multimodal transit app and, crucially, its open data platform.

Going smart early on is what gave the northern German city an advantage, says Hamburg’s chief digital officer Christian Pfromm. “What we also realized is that digital change can only succeed if everyone pulls together – digitalization is a team sport,” he says. Pfromm cites partnerships with international companies on intelligent traffic control, urban energy management and new mobility concepts. And, most importantly, sufficient bandwidth to accommodate data flows.

This new metro station and the entire rail network will be integrated into Hamburg’s digital platform for monitoring and analyzing the city’s infrastructure. Hamburg is rated Germany’s smartest city. © picture alliance/CHROMORANGE/Alexander Bernhard

Attracting smart money

Smart cities require robust information infrastructures. The US information services company Equinix selected Hamburg for its new data center because of its proximity to both the North Sea cable landings and the trading floors of Frankfurt. The company invested a total of USD 150 million between 2018 and 2019.

“Hamburg is an important strategic European digital hub and has an extremely strong trade sector,” says EMEA Equinix president Eugene Bergen Henegouwen. “The new location will not only help us cover the growing demand for interconnection services in the German market, it will also strengthen our European data center footprint.”

Hamburg’s Digital Twin project with Munich and Leipzig, funded with EUR 32 million in national funds, is developing interconnected digital twins, which are based on urban data platforms, for monitoring and analyzing city infrastructure. Meanwhile, its smartPORT project is networking the streets, bridges and locks of Germany’s busiest harbor to better coordinate traffic, reducing expenditures and emissions.

Facts & Figures


Sensors feed into Hamburg’s Urban Data Platform cockpit


Bitkom ranked the “smartness” of German cities according to 136 criteria. The prominence of smaller cities on the list shows that size is less important than drive.

Intelligence matters, not size

Some other, internationally less well-known cities also rank highly on Bitkom’s list. Osnabrück, for example, jumped to number eight thanks to its expanded e-government services, while Gelsenkirchen rose to number 22 because it improved its Internet connectivity.

“It’s not always about the size of the budget,” Pfefferle says. Smaller cities, too, can benefit from the many national and regional funding opportunities for projects. Germany’s Interior Ministry has pledged EUR 820 million for what it calls “Lighthouse” smart city projects over the next decade. These public projects require experienced companies to deploy solutions that work. A study by consultants Capgemini found that 74 percent of municipal leaders in Germany favor public-private partnerships.

For instance, back in Berlin, the Tegel Projekt has already signed a cooperation agreement with New York University to research Big Data, blockchain and artificial intelligence solutions.



Germany’s cities drive Europe’s economy.

Europe’s largest economy has 81 cities of more than 100,000 residents, and Germany accounts for 5 of the top 15 European cities as ranked by GDP.


German cities are autonomous.

In many respects, German cities are free to create their own regulations and run their local administrations as they see fit. This provides the opportunity for unique public-private smart-city partnerships.


Cities are actively looking for tech solutions.

A survey from Capgemini found that 74 percent of municipal leaders in Germany believe collaboration with “outside entities” and international partners is essential to create smart cities.


The national government offers major funding for smart cities.

The Interior Ministry has pledged EUR 820 million for pilot smart city projects and digital solutions that can be emulated across the country.


The coronavirus pandemic is accelerating digitalization.

The recent Online Access Act (OZG) requires all 11,000 local governments to make their public administrative services accessible online by the end of 2022. Contact restrictions due to the coronavirus pandemic have sped up this transition.

Urban challenges drive innovation

The repurposed airport is expected to become a hub for start-ups and create about 20,000 jobs in the German capital. It’s the perfect location for international companies looking to partner with educational and research institutions. “In the face of the climate crisis and demographic changes, the challenges for fast-growing cities are immense,” says the Tegel Projekt’s director Bernhard Hildebrand. “And that is why, more than ever before, we need to develop new concepts and put into practice coherent structural innovation.” The old Tegel Airport was a twentieth-century institution rooted in its time. Now that its runways lie empty, it is about to enter the twenty-first century.

The Cube is a Berlin office building equipped with absolutely state-of-the-art technology, including 3,800 sensors for intelligent control. Construction costs were around EUR 100 million. © picture alliance/Global Travel Images

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