Urban regeneration as a concept encapsulates the perception of decline in inner city economies, in the quality of the environment and in social life as well as incorporating the process of renewal to establish a basis for economic growth and social well being. The focus of urban regeneration is therefore, a response to both the problems and the new demands created by economic, social and physical change.
Successful regeneration, although not synonymous with property development, requires a tangible outcome in the form of real estate. Integral to this process is the role performed by the private sector in terms of stimulating property development and investment with the public sector operating in a facilitating capacity. Combined with the opportunity for capital appreciation and the supportive nature of public sector initiatives, physical regeneration needs to be seen as a means of delivering wider regeneration benefits by contributing to the sustainable city concept within which economic issues are inseparable from social and environmental concerns.
The regeneration of land and buildings necessitates the use of capital resources and raises the question of access to and the availability of private sector finance. Indeed the more intensive the level of development, the more that process is dependent on financial and investment markets for its capital requirements. From the private sector perspective, inner cities and urban regeneration projects are commonly perceived to carry considerably greater risk compared to prime property locations; and given the need to secure adequate return on the value of assets, decision making may by-pass the potential opportunities in urban regeneration locations.
Over the past two decades the topic of urban regeneration has been extensively researched and reported upon in the United Kingdom. However relatively little knowledge is available on the nature of private sector investment, the type of investor, the strategy employed, attitudes towards specific delivery mechanisms, and the perception and handling of risk.
This paper draws upon research work undertaken by the authors and funded by the Joseph Rowntree Foundation into the financing of urban regeneration initiatives. In particular the paper compares the results of two surveys, the first targeted at private sector investors engaged in urban regeneration and the second is focussed on investors who explicitly do not invest in urban regeneration.
The analysis compares the two survey cohorts profiling the nature of their portfolio and degree of exposure to property investment including the degree of diversification by property type and regional location within the UK. For the investors in urban regeneration, the scale of investment is analysed relative to specific initiatives and different phases in the property cycle and the motives for holding a regeneration portfolio.
Correspondingly for the non-investor cohort motives for holding property portfolios, scale of property investment and reasons for non-investment in urban regeneration are analysed. In comparing decision-making criteria investor and non-investor attitudes are analysed over a range of evaluative indicators and risk reduction measures. Factors facilitating the flow of private sector finance are also assessed across both cohorts. The paper draws conclusions concerning the perceptions and behaviour of private sector investors and non-investors in urban regeneration highlighting differences between subgroups.
