Kate Nicholas: Foreign investors will follow their heart

What is it that makes a place of business more than just a location? The holy grail for foreign investment is the concept of a ‘destination’: a place everyone, most importantly the investor, wants to be.

About five years ago the answer to this was a good IT infrastructure and an endless supply of cheap, willing staff. But in today's global marketplace, homogeneity of property development and technology means the world has become increasingly flat, with few differentiators on the landscape. Throughout the developed world you are greeted by the same set of global brands, you can access the same level of technology, and local corporations may well be indistinguishable from those of any other major US or European city.

While this may make for safe investment decisions it is hardly guaranteed to set the pulse racing with visions of new horizons. In fact, a YouGov report released this week by The Communication Group found that as more countries meet basic business criteria, 65 per cent of investment decision makers are finding it rather difficult to differentiate between potential destinations for their cash.

There are always going to be some basic prerequisites for investment, but 92 per cent of the investors said the great intangible – 'image' – played a greater role in their decision making. Other
factors were far more intangible than I suspect most would admit to admiring outside of an anonymous survey – such as friendly locals and strong traditions in culture, the arts, architecture and sport.

But investment decisions are ultimately made by people. And people aren't ruled by reason alone – they like 'nice' places. Myriad other factors also come into play, such as what staff – never mind the CEO's wife – might think of the destination to which they have been relocated.

It isn't rocket science, but even among inward investment agencies there are still those who reject the idea that intangible assets such as reputation and image play a part in foreign investment. They are likely to have a rude awakening when young upstarts, recognising that tangible assets have become commoditised, learn how to create this emotional connection.

The star locations of the future will be those that recognise the need to treat investors like tourists – think Thailand, the land of smiling faces. They must also create a narrative around their intangible
assets, add texture to their offering and sell a credible story to investors and their peers.

kate.nicholas@haynet.com

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