The last mile is complex and expensive, says the World Bank. If it is too expensive, people simply can't access those services. On the other hand, an infrastructure built to serve a small city can't support the needs of a rapidly growing city. There is a middle ground: It's called smart cities. Image: World Economic Forum "That's the problem we've seen around the world, where you get this dichotomy of a great service network, but we're often missing critical infrastructure, such as water or power," said Karel Koum, head of strategy, partnerships and programs at the World Bank Group. "But by combining the public and private space, we're trying to build it smarter and deliver it more efficiently." Koum was speaking to CNBC on the sidelines of the Global Summit on the Future of Cities in Singapore, a three-day conference and event put together by Cisco Systems and the University of California, Berkeley. The future of cities is intertwined with the future of the Internet of Things, because cities are growing smarter. Smart infrastructure is one of the critical components of building that smart future, according to Koum. Cities are growing exponentially because more and more people are living in them, and it is predicted that by 2050 there will be 9 billion people living in the world, two-thirds of them in urban areas. That means there is a great need to rethink cities as a new, digital age. A recent Cisco study of nearly 500 cities around the world found that urban populations were more than 1 million in about 130 cities. And they're growing fast. In many cases, the city's infrastructure simply wasn't built to keep up with population growth. The number one challenge for cities is affordable housing for a growing urban population. It's a crisis that has spawned some truly creative solutions. One is housing above ground, but another is building vertically. It's like building up instead of out. "This should help the demand for urban real estate, but it also opens up a lot of opportunities for companies that are able to build up," said Alvin Lee, CEO and founder of Bionym. Bionym is developing the world's first smart building, in the Silicon Valley city of Santa Clara, Calif. The key to the building is a network of sensors that allow users to track what's happening on the property. The company's system tracks the physical and environmental state of the building, what people use, who uses it, if there are issues, and so on. "Our vision is to move from a network of devices in a static building to something much more intelligent where the systems are built into the very building blocks of the house," Lee told CNBC in an interview. The homeowner knows exactly what's going on in the house at any given moment, allowing them to make sure the house is in tip-top shape. "For example, when a window breaks, I would know it immediately. It can tell me what happened before it happened. In a way, it's preventive maintenance, and this way we can build a much smarter, adaptive, resilient infrastructure." In one example, Bionym is working with a major U.S. retailer. If the retailer notices that a particular product is selling well in a particular store, for example, they can then look into why. If there is excess inventory on the shelf, they can redistribute the inventory. If an item is in stock, but not in a particular color that will be sold this week, they can put that item on sale. It's about making the store smarter for consumers. And also making the product smarter for the manufacturers. "And this will allow these players to take advantage of dynamic changes in demand based on real-time intelligence," Lee said. "We can actually take something like transportation and the traffic, and make sure that every vehicle is taken advantage of and that we can optimize the number of vehicles, the routes, the timing and the distance." This is a perfect example of cities and the Internet of Things creating new efficiencies for society. There's still some work to do on the technology side of making the Internet of Things more mainstream, according to Lee. "We're a year and a half away from having all this stuff connected to the internet. But you need the right infrastructure in the city. And you need the city to be connected, and we need the systems to talk to each other. So we're not quite there yet." He says there's a race to develop the hardware and the software needed for this type of smart infrastructure. To stay up-to-date on the news impacting investors in Asia, visit Asia Society.org.