Collaborating to compete: Cities as growth engines

These are some of the questions considered by a panel at the World Built Environment Forum 2018, London Summit.

The view of investors

What makes investors want to invest in a city? Vanessa Muscarà, Associate Director, Property Research at M&G Real Estate shares some the findings of her research, which supports the investment decision making process at M&G.

“M&G is a low risk investor in a low yielding landscape,” she says. “So we have to look beyond typical supply/demand fundamentals to characteristics which enable property fundamentals to flourish,” she explains.

The first of Vanessa’s studies looked at innovation and connectivity. One of the key areas she considered was the number of patents filed per resident worker. This gave rise to an innovation score for each of the cities she looked at. She then overlaid the rental growth with the innovation score and looked for a positive correlation. 

Among the cities that came out on top were Eindhoven and Dortmund “not your traditional real estate markets,” she says. 

The next study looked at urban connectivity, using 18 indicators of connectivity. 

The best connected cities were Paris, Berlin and Stockholm. But when Vanessa then added data points like the maturity of an urban transport system, the Wi-Fi speed and number of hotspots, the dedicated cycle paths as well as the affordability of a monthly ticket, transport emissions, and passenger satisfaction surveys, then Gothenburg, Helsinki, Dusseldorf and Stockholm came out on top. 

It’s food for thought from an investment point of view. But what about innovation itself, how important is that to a city?

Innovation

Few disagree that much of a city’s future success lies in its ability to innovate and harbour innovation. Alex Edds, Director of Innovation at JLL explains how cities can support innovation.

There is a new language of city competitiveness emerging, he says. Words like diversity, technology, entrepreneurship, and future proofing. This competitiveness relies on attracting talent, and cities need to nurture that talent, such as providing the necessary research and development hubs.

Cities now had to come up with a proposition for their citizens and businesses, much like cities in America had done for Amazon’s beauty contest, he says.

Future proofing was also key. Future-proof cities like San Francisco, Silicon Valley, New York, London and Boston shared some key characteristics, such as technology firms, good education, thinking about the environment, transparency, infrastructure, and generating international patents. 

However, there were cities that were changing at a frantic pace and challenging the status quo. Some of the most dynamic included Hyderabad, Bangalore, and Ho chi Minh. 

However, while rapid urbanisation and population growth had made them key hubs on the global stage, they had not yet demonstrated longevity.

Beyond cities

David Burrows, Managing Director, International Organisations and Global Public Sector at Microsoft Organisation, suggests that we could think beyond cities into cohesive regions.

Examples he gives include Cascadia, an independent vision for the Pacific Northwest in the US, and the Blue Banana, a corridor of urbanisation spreading over western and central Europe.

“Cities have been building blocks to economies for centuries, they thrived either because of location or skills, trade focus or patronage,” he explains.

“But today, with the new forces of technology is this the desirable direction we should be going in? Or should we be having a more elastic definition?” he asks.

We can’t underestimate the increasing important of information technology and cities, he adds.

“There is a growing body of evidence about the role of IT for economic growth and connectivity and the use of modern IT in governments to enable efficiency,” he states.

“Every industry is digitising. The world is becoming one giant network – we are all connected to the internet.”

There is an acceleration in velocity of change and urgency for cities to respond, he adds.

However, he also issues a warning.

“As we move technology forward, we mustn't lose sight of those not moving as fast. The elderly might baulk at the idea of their pensions being paid into their bank account, because they rely on the weekly contact at the post office.”

Cities of the future - based on data

Jacob Würtz, Co-founder & CEO at Mesopo, data analytics specialists, continued the theme that technology, and in particular data, had a crucial role to play in city planning.

Cities need to do much more with the data they have got to understand how their city really works.

“In the built environment we spend years planning and building then we cut the ribbon and walk away. If other businesses were run like this they would be bankrupt,” he states.

There is a lack of good quality data in the built environment as a whole, he adds. Yet data could help us understand what we really want from our cities.

For instance, in the future, cities had to optimise for people not for cars.