March 9, 2011
Olympics, EXPOs, World Cups: catalysts for urban investment? – Greg Clark, Senior Fellow, ULI Europe
Why global events work well in the global era.
At MIPIM 2011 we will hear from cities like London, Milan, Sochi, which are about to host major events (London, Summer Olympics 2012, Sochi, Winter Olympics, 2014, and Milan, World EXPO 2015) as well cities such as Glasgow that will shortly host the Commonwealth Games (2014), and many cities that will be capital’s of culture in the next 10 years.
Hosting global events is truly back on the map as an acceptable way to promote investment and internationalisation, and events are competed for by the world’s top cities and by the fastest emerging nations. In a 5-year period we have seen London, New York, Tokyo, Paris, Madrid, Shanghai, Beijing, Rio, Sao Paulo, bidding for, and hosting, events, and Russia, China, India, Brazil, South Africa will all have hosted their first global events within the same decade. Global events work well in the global era.
Whilst there is emerging science of how to use events to achieve a lasting legacy and a vast literature of case studies and analysis of what works and what doesn’t work is now available, there is still some cynicism about whether the costs are justified by the benefits, and whether, if the same amount of money had been spent in another way it wouldn’t have been better.
However, both public and private sectors consistently support the use of these major events to help bring forwards new developments in cities.
The public sector likes hosting global events because:
- Urban development and investment are long-term activities. Hosting international events helps to provide milestones and staging posts which help cities to accelerate through cycles of development and investment in specific locations. But global events will only help if they are not managed as a one-off but are used to drive implementation of existing long-term urban development strategies.
- Such events turn certain specific locations into national priorities for a specific period of time and allow a concentration of efforts and a scale of public investment that would not ordinarily be possible.
- Events also provide a short-term boost in areas of construction and tourism (for example) which bring people into the labour market and small firms into new supply chains.
- Events can also stimulate greater participation and aspiration of citizens and have a major impact on community activism and self-help initiatives.
- Global events offer new identities and a fresh start for places that may have developed a poor image or reputation and need to find a new path.
- Events of this kind can strengthen local capacity, improve confidence, and build the ability to manage change and development better. It is important to have other major developments and projects in train to maintain momentum after the event.
The private sector likes to invest in areas which are hosting events because:
- The immovable deadlines and other external requirements provide discipline and certainty which reduces private sector risks, and means that investment projects make work better with the grain of private sector discipline.
- The areas that host events are generally the focus of major infrastructure renewal and modernisation, which encourages business efficiency and market access.
- The areas used will usually have under-developed land and property markets and may be more affordable than other areas in the same cities, offering great potential for rapid value creation.
- Major events will provide extensive brand-building and media exposure for the area and its businesses which can be leveraged as free marketing.
- Major events will shape a local or regional investment market for several cycles into the future and offer ‘first-mover’ advantages to those who invest at the start.
- Hosting major events of this kind can strengthen local supply chains and improve the skills of the labour force, these are also important drivers of investment and should be nurtured and communicated to potential investors.
So, underneath the fierce competition to stage such events, there appear to be three elements that simply can’t be bought and can only be achieved through hosting:
Because the world comes to visit on a certain immovable date, everything is accelerated to meet this deadline and inertia is avoided.
Because the events themselves bring strong branding and visibility, the hosts experience a great opportunity for brand alignment and image renewal.
Because the hosting locations must be a source of national pride when the event occurs, they temporarily become national investment priorities, beyond the usual rules of how public finances are allocated.
No cost/benefit analysis will ever capture the value add of hosting events if it brings these game- changing elements, and cities know this when they decide to bid.