Urban Transformation

7 principles of good governance for the post-pandemic city

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How cities perform will matter more than ever Image: Reuters/Mehmet Emin Caliskan

Christian Ulbrich
Global Chief Executive Officer; President, JLL
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This article is part of: The Davos Agenda

• The pandemic will cause significant disruption in how cities are managed.

• Cities with stable governance based on a consensus for future development will fare better.

• City governments must view the real-estate industry as a partner in shaping this vision.

The COVID-19 pandemic has exposed just how vulnerable cities are to external shocks. Debate is now raging on the future path that cities will take, with some even speculating that urbanization will go into reverse. The reality is that we all continue to live in an age of urbanization. How cities perform will matter even more than ever.

Over the coming years, our cities will continue to face significant disruption. Changes to lifestyle and work preferences, combined with technological advancement, have the potential to radically alter urban location patterns, and change how our cities and buildings are used. Pressures to move to a low-carbon economy and build a more equitable society will intensify, requiring fast-track routes to creating green infrastructure, embracing the circular economy, developing affordable housing and new, sustainable mobility solutions.

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Some cities will be much more successful at responding to these challenges than others, at “building back better” and capturing the economic opportunities that emerge in the next cycle of recovery. City governance – the way cities are run, led and managed – will sort the successful cities from the less successful as we emerge from the pandemic.

The seven principles are drawn from research canvassing the real-estate industry
The seven principles are drawn from research canvassing the real-estate industry Image: JLL; The Business of Cities

The seven principles

In partnership with The Business of Cities group, JLL has sought to explain why city governance is becoming more of a differentiator for cities and the real-estate industry. If real estate owners, occupiers and investors had a “wish list” for their city government partners, what kind of things might we see on it? Our analysis of city performance data and interviews with city and real-estate leaders have identified seven common principles of good governance:

1. Political consensus and continuity

Political flux is in the DNA of most cities. Political cycles are short, while major infrastructure and real estate projects can take 10 to 25 years. In some countries, however, leaders may change yet policies remain consistent, because there is a depth of civic consensus, commitment to evidence-based policy and an inclination to support the key engines of national growth and sustainability.

2. Metropolitan management

For real estate, the scale of opportunity that a city offers as a single, whole market is essential. If the city can manage its growth at something close to a “whole city” scale, it can assemble land parcels of the necessary size to stimulate the market and create attractive opportunities. It can define a long-term vision, develop coherent planning frameworks and rational land-use policies. This adds to predictability and reduces the risk of wasteful competition from neighbouring locations, or of asset obsolescence during periods of adjustment.

3. Fiscal capacity

A key signal of a city’s power to recover from downturns and co-invest in its long-term success is its ability to regularly secure public investment to meet new priorities of infrastructure, housing, resilience and quality of life. This will be especially important in a post-COVID fiscal context. Greater fiscal agility and independence add certainty and capacity for city governments. It allows them to integrate capital investment budgets, plan for long-term investments and become more competent partners for private finance.

4. Instruments to optimize land and infrastructure

How efficiently cities use land is a big shaper of the industries they can host, their attractiveness and their potential to be environmentally prudent. This is even more important in light of COVID-19 as cities require agility to respond quickly to changing health requirements, movement patterns and business needs. The demand will grow for speed and flexibility in how buildings and land are used.

5. Vision and appetite for the future

Even for a city with far-reaching formal powers, delivering change relies on a shared ambition about what it wants to become, endorsed by business, citizens and communities. Ambitions for a city’s future, especially during and after times of profound setback, stems from a city’s own common purpose. A compelling vision also enlists the capacity of the real-estate sector to conceive, design and deliver the kind of development the city needs.

6. Commercial readiness and agility

The experience of real estate in urban markets depends on how nimble a city is in building partnerships, doing deals and ensuring the regulatory environment is transparent, predictable, speedy and responsive. In some cities, business and real estate are welcomed to propose opportunities, share risks, contribute to decision-making and provide insight on anticipated future needs.

7. Brand and story

In a crowded global marketplace and amid the scrutiny of a worldwide pandemic, demand for a city is inspired by its visibility and reputation. A city whose identity has global reach and conjures a powerful set of ideas as a place to do business, visit, study and innovate, is more resilient against shocks: It has an enduring magnetism to trade, investment and talent. It provides a conducive environment for the real-estate community to demonstrate both the civic value it can create and its contribution to wider goals.

The real-estate industry as city-shaping partner

The disruptions that our cities are now facing, and the ever more complex nature of city transformation all point to governance being increasingly vital to a city being “future fit” for the coming decades. Crucially, effective city governance will require much greater collaboration between all stakeholders, and the forging of new partnerships between city governments, businesses and real-estate owners.

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What is the World Economic Forum doing to support the Future of Real Estate?

Increasingly, city governments will need to view real-estate developers, investors and occupiers as partners that can help to achieve goals that would otherwise be difficult in a post-COVID world. The real-estate industry should be seen as an eager partner in meeting the challenges of creating a climate-aware economy and a more equitable society; and many businesses are keen to demonstrate their environmental and social responsibility. Business can act as a standard-setter, a demonstrator, an eager collaborator and an advocate for long-term change in the shared interests of a productive, sustainable and responsible city.

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Related topics:
Urban TransformationClimate ActionForum Institutional
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