Social value is the key to unlocking urban transformation

The article emphasizes the importance of social value in driving urban transformation, particularly in the aftermath of the COVID-19 pandemic. Written by Mark Edward Rose, the Chair and Chief Executive Officer of Avison Young, it highlights the challenges urban areas face, including inequality, urban decline, and the need for sustainable development. Avison Young is a global commercial real estate firm that advocates for innovative solutions to urban issues, making it a relevant contributor to the dialogue on urban regeneration.

The piece asserts that focusing on the social value of the built environment is crucial for effective urban transformation. Public-private partnerships are identified as a means to overcome challenges in regenerating urban areas. The article notes that the pandemic has exacerbated issues such as online shopping, increased flexible working, and rising crime, leading to greater inequality. As a response, the private sector is increasingly recognizing its role in driving transformational urban regeneration.

The article points to a growing focus on social value considerations within the corporate sector, which is reshaping the financial viability of urban regeneration projects. For example, Nuveen Real Estate aims to manage $15 billion in real estate assets under a global impact investing program by 2026. Similarly, Schroders Capital has initiated a place-based impact investment strategy targeting social deprivation and inequality while ensuring financial returns. Legal & General plans to invest £4 billion in urban regeneration and housing development in the UK’s West Midlands by 2031. This trend reflects a significant growth in the impact investing market, which surged by over 60% since 2020, reaching a valuation of $1.2 trillion in assets under management by 2022.

The article discusses how private sector interest in public-private partnerships (PPP) is driven by the potential to unlock large-scale development projects, which often require public authority involvement. The public sector can contribute land and borrow at advantageous rates, helping to de-risk projects and attract additional private investment.

Despite the growing willingness to collaborate, three key challenges persist in urban transformation:

While the article acknowledges that solutions to these challenges exist, it emphasizes that there is no universal approach to urban regeneration projects. Each project is unique, requiring tailored partnership structures to facilitate investment capital flow into urban regeneration. Avison Young is actively collaborating with the World Economic Forum to develop frameworks that support local governments in effectively partnering with the private sector.

The article concludes with a call to action, inviting stakeholders to join efforts aimed at delivering social value outcomes essential for addressing the challenges faced by urban communities. By fostering collaboration between public and private sectors, the potential for sustainable urban transformation can be unlocked.