Factors influencing urban investment attractiveness: An FCM-SD approach

Abstract

The increasing concentration of populations in urban areas in recent decades has strengthened the interest in – and the importance given to – these zones. Cities have become quite attractive from investors’ point of view because of the wide array of opportunities and growing need for investment in urban areas. Thus, city strategic planning quite often requires  an understanding of the determinants that attract investment to urban zones. This study sought to identify the factors that strengthen urban investment based on the knowledge of a panel of experts. Fuzzy cognitive mapping techniques were applied to understand the concepts and decision criteria included in the decision-support model and their cause-and-effect relationships. The results provide insights into which determinants most strongly influence urban investment, namely, infrastructure, supporting services, and political-administrative factors. Diverse scenarios at the intra- and inter-cluster levels were created to clarify the impacts of variable changes on the model developed. The findings were validated by both the expert panel members and the vice-president of the Portuguese Association of Real Estate Developers and Investors. Advantages and limitations of the proposed framework are presented, as well as recommendations for future research.