WASHINGTON – April 10, 2014 – According to a survey of public- and private-sector leaders conducted by the Urban Land Institute and EY Global Real Estate, the quality of infrastructure systems – including transportation, utilities and telecommunications – is a top factor influencing real estate investment and development decisions in cities around the world. Other top concerns include consumer demand.
The results of the survey are included in Infrastructure 2014: Shaping the Competitive City, which can be downloaded online.
The survey, conducted in January 2014, reflects the opinions of 241 public sector officials and 202 senior-level real estate executives (developers, investors, lenders and advisors) based in large and mid-sized cities across the globe, with concentrations in the United States, Europe and Asia Pacific.
- 88 percent rated infrastructure quality as the top influencer of real estate investment and development. Public leaders rated infrastructure quality as the highest influencer (91 percent) and private leaders ranked it second highest (86 percent).
- Demographic forces, including consumer demand and workforce skills, ranked as another top consideration determining real estate investment locations. Consumer demand was viewed as the top factor by the private sector (90 percent).
- Strong telecommunications systems (including high-speed internet) led the list of infrastructure categories that drive real estate investment, along with good roads, bridges, and reliable and affordable energy.
- Public transit led the list of infrastructure investment priorities. Seventy-eight percent of survey respondents' said public transit systems, including bus and rail, should receive top priority for infrastructure improvements, followed by roads and bridges (71 percent) and pedestrian facilities (63 percent).
- Investment priority rankings tended to be the inverse of quality perceptions, with only 48 percent of survey respondents ranking public transit as "good" or "very good" in quality, and 51 percent saying sidewalks and pedestrian facilities were good or very good.
- The public's willingness to pay for infrastructure was ranked as the top factor shaping both infrastructure and real estate development over the next 10 years, followed by consumer demand for compact, walkable development, and the prevalence of families with children. The cost and availability of energy and the use of innovative pricing systems to fund, manage and operate infrastructure ranked slightly lower.
- Three-quarters of respondents identified cooperation between developers and local governments as the most significant funding approach for new infrastructure. Other strategies that require collaboration between real estate and civic leaders – including value capture and negotiated exactions – also top the list of likely infrastructure funding sources. All funding strategies offered in the survey – including contributions from federal and state governments – received relatively strong responses, suggesting the need for a range of funding options.
- The survey found skepticism among respondents about long-term operations and maintenance of infrastructure. Overall, 30 percent said local governments usually neglect it; 72 percent said it's considered only some of the time or not at all. Private sector respondents were much more pessimistic about this than public sector leaders; and respondents from outside the U.S. had a more positive view than those in the U.S.
"This survey indicates a growing awareness among the public and private sector of the importance of investments in a variety of transportation systems, including 'active' transportation that offers an alternative to constant car use," says ULI Chief Executive Officer Patrick L. Phillips. "We have entered a new era that requires new approaches to funding and building infrastructure to support the creation of communities that are healthier, more livable, economically prosperous, and environmentally sustainable."
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