Attracting private sector investment into a city is essential for stimulating and maintaining economic growth. Cities themselves have an important role to play in this process, making investors aware of opportunities, building relationships with them and, where necessary, stepping in to facilitate investment. But it is not always clear what investors are looking for when making an investment, and how cities can make themselves more attractive for investment.
Through interviews with a range of industry experts and cities, this report demystifies this process by doing two things. Firstly, it provides cities with insight into the mind of an investor, exploring what is considered attractive in a city. Secondly, it provides practical recommendations to support cities to develop their approach to attracting investment.
For investors, the city traits they most highly value are:
- A strong city economy with growth potential, a highly-skilled workforce, and resilient to economic downturns and external shocks.
- Excellent transport connections, both within and beyond the city (nationally and internationally), as well as a transport system that can keep up with an expanding economy.
- Pro-investment city leadership, which prioritises investment, has consistent policies and attitudes, is high profile, and has bargaining power with central government.
- A focus on delivery, with a responsive, pro-investment planning system, a team with access to investment expertise, and willingness to step in where necessary to facilitate investment.
But attracting investment is not just about having these characteristics – cities must make investors aware of the opportunities they offer. The strength of the city’s reputation amongst investors and their level of familiarity with contacts in the city also determine the likelihood of it being considered for investment.
So as well as developing investible opportunities, a city also requires a strong profile amongst investors. Given this, cities should focus on the following steps:
- Use expert resources
To attract private sector investors, a city must seek investment expertise to ensure they understand how investors think and behave. Doing this in conjunction with neighbouring areas or cities can strengthen the proposition that is put to investors.
- Know the city’s offer and audience
Understanding a city’s strengths and weaknesses in the eyes of an investor is crucial, allowing the city to focus on promoting what it is good at and improving where it is weaker. Designing a city vision that sets out its ambitions gives investors clarity about the investments required by the city, and an accompanying development plan should provide the information they need to consider each one.
- Build networks to sell the city
The investment industry is built on relationships and who you know is important. Rather than wait for investors to come to them, cities should proactively reach out and develop long-term relationships. Providing detailed information about each opportunity makes it easy for investors to consider them.
- Close the deal
Be willing to step in and take a more active role, such as by using city assets, where necessary to facilitate investment.