Cities are tackling urban challenges with bold regeneration. Here's how  

Cities are at an inflection point. The scale of change needed to meet urgent challenges while retaining top talent and attracting capital in an increasingly mobile, discerning and price-sensitive world continues to grow. Urbanization is placing pressure on existing infrastructure, while the costs and complexity of providing critical services continue to rise. Compounding these are macroeconomic constraints and political uncertainty that limit the speed at which city authorities and private-sector players can intervene with critical investment.

Concerns are particularly acute for owners, investors, managers and occupiers of the built environment. Income-producing real estate totals more than $62 trillion globally, with more than 19% of this owned by institutional investors. Around 58% of this value is found in 40 metropolitan areas, underscoring cities’ importance as a store of global wealth and the need to protect value through investment and regeneration.

Doing nothing is not an option; if left unaddressed, the inability to manage urbanization sustainably and efficiently will degrade economic competitiveness and make it difficult for cities to retain skilled talent and institutions. Traditional approaches to handling urbanization and development will need to adapt if cities are to succeed in effecting bold plans for long-term growth.

Strategies to accommodate urban growth traditionally fall into two complementary tracks: regulatory-based and investment-based.

Regulatory-based approaches are typically focused on creating more flexible land use policies, speeding up time from application to delivery, and simplifying and standardising sustainability reporting frameworks. The inherently political nature of this presents an additional complication as cities, and even countries, attempt to substantially increase housing production targets while streamlining planning processes.

Investment-based approaches typically involve building new infrastructure or upgrading a city’s existing supply through a mix of public and private capital. This includes investment in public transport, energy, water, and telecommunications, alongside improvements to public spaces and experiences for residents, workers and visitors. Higher interest rates combined with the rising cost of labour and materials, however, only make it harder to deliver increasingly complex projects on time and within budget.

But cities are resilient, and many are pioneering innovative solutions to meet their most pressing needs. Importantly, these strategies are combining elements from both the regulatory and investment approaches to achieve higher returns on investment while accelerating the delivery of critical infrastructure and real estate.

In recent years, three new groups of policies have emerged: ready-made planning solutions, alternative financing mechanisms, and digital-first planning optimization. Deploying these approaches in combination can yield substantial benefits for the built environment, help city authorities in achieving overarching strategic objectives, and open opportunities for the real estate sector to address shortfalls.

Ultimately, authorities, institutions and investors will need to partner more strategically to thrive in this new era of urbanization. Innovative thinking, targeted planning, and frameworks that allow cities to address multiple goals simultaneously will be fundamental if we are to succeed in preserving the value of the built environment. At the same time, authorities will need to balance the risks of increasingly ambitious solutions by engaging the right talent to ensure their plans and investments are deliverable.

With proactive collaboration between the public and private sectors, cities will remain fertile ground for innovation, prosperity and culture into the future.