The influence of municipal spatial visions on developers’ investments in urban area development

Abstract

Introduction, Scope and Aim:
The objective of this research is to examine the influence of municipal spatial vision documents on the decision-making process of developers to participate in urban area developments. For this research a literature and case study as well as an expert meeting were used. With the case study methodology four urban area developments in the Netherlands were studied and included a desk research regarding the vision documents published and interviews with developers regarding their views of these documents and their reasons to invest. The results from the case studies were analysed and validated through an expert meeting.

Main results:
This research concluded that spatial policy documents play a crucial role in the urban development process since they create a first framework for the development. However, it was also noted that these documents can be unrealistic and fail to effectively persuade developers due to not considering the financial aspect of the development. It was furthermore concluded that these documents are important for the decision-making process of developers, as it is political statement from the municipality that it endorses housing development in a certain area. Developers furthermore look for clues in vision documents on what could be built since this greatly determines their development business case. However, such clues are of lacking in these documents and are therefore described by developers as vague. Furthermore, developers desire a balance of flexibility and certainty in spatial vision documents and the area development process. The internal decision-making process of developers regarding participation in an area development consists of creating a business case and conducting a risk analysis of the development, which are combined into an investment proposal. The decision whether to invest is not solely based on the business case being profitable and line with the internal goals of the developer, but also on having the 'belief' the development can be realised, which is based on the risk analysis as well as the developer's (gut) feeling about the development.

Main conclusion and recommendations:
Based on this research, it can be concluded that ultimately many factors influence the decision-making process of developers. Spatial vision documents contribute to this decision, but there is no direct cause-effect since other factors are also in play. Crucial are the shaping factors indicating what could be built that can be derived from the spatial vision document. Moreover, capacity building factors related to the reputation of and relationship with the municipality play a crucial role. These factors influence the 'belief' of a developer for successful area development. Additionally, factors related to developers' internal goals and modus operandi have a crucial impact on their decision of where to invest. It can be concluded that it is crucial that parties collaborate early in the process, that their relationship is good and, importantly, that there is mutual trust.

Summarising, spatial vision documents, shaping instruments and capacity building tools are an important influence on the decision-making process of developers, but internal and external factors play an at least equally important role.