ULI conference: cities need to improve transparency on risk

Europe's cities need to be more transparent and provide better risk scenarios in their drive to attract real estate investment. That was one of the conclusions of a panel devoted to the subject of 'Winning Cities' at the ULI trends conference in Amsterdam last week.

Rosemary Feenan, international director of global research at Jones Land LaSalle, said that transparency and risk was one area where cities needed to improve their information to investors. 'All the investment incentives in the world are not going to work if the risk factors [of a city] are seen as too high,' she said. Risk scenarios could cover factors such as how physically resilient a city is to natural disasters in the flooding and earthquakes. 'Investors are paying increasing attention to these areas,' Feenan said, adding that this could include things such as whether sluices on city waterways work properly.

While it was difficult to determine what the bottom line is for investors when they review different cities, the panel agreed that 'soft' factors such as liveability, image and identity are becoming increasingly important. 'It is clear that investors are looking at more than just GDP, but it remains to be seen how they [the soft factors] really factor into their decisions,' Feenan said.

Despite a proliferation over the past decade in the number of indices and rankings comparing the performance of cities on a range of issues, 'we're still in a discovery phase about measuring what a successful city actually is', Feenan said. 'We have so much information on cities, urban analysts are digging into every corner, but we're still not measuring very well and not really linking to real estate.' That said, the complexity of city benchmarking was set to increase even further, she said.

Panelist John Forbes, real estate funds partner at PricewaterhouseCoopers and co-author of the annual PwC/ULI Emerging Trends in Real Estate Europe report, said that real estate investors were reluctant in the current climate to rank their investment preferences according to cities. 'Investors cannot rely on picking cities in the current environment. Their behaviour at the moment is "granular"; investors are looking at specific assets, not necessarily which cities they are in,' he said.