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Queensferry Crossing
The Queensferry Crossing, right, which opened last year is part of a significant program of capital projects that have enhanced connectivity in Scotland

What brings investors to a city? Location and talent top the list but the unique collaboration between Scotland’s cities allows it to punch above its weight

by Colin Cardwell

Why do some cities attract investment more successfully than others? Is it merely location, location, location – or because talent attracts talent? Most of the time the recipe for success requires both ingredients, underpinned by modern infrastructure that is fi t for purpose.

Foreign direct investors have no scarcity of options when it comes to channeling large amounts of money, and smaller countries such as Scotland need to punch well above their weight – which the Scottish Cities Alliance (SCA), a unique collaboration of Scotland’s cities, is emphasizing with a pitch book showcasing $10.7bn of investor-ready programs.

Michael Henderson, a partner with Edinburgh-headquartered law firm Shepherd and Wedderburn, who is listed in the International Who’s Who of Real Estate Lawyers, underlines the fact that investors have a number of options as to where to place their capital.

“When they go to a country or a city they’re looking for an area that has existing visibility and potential: it must be going somewhere, not just standing still.”

And that, he believes is where leadership comes into play.

“There will be people who are not just doing what they did yesterday but instead are looking to their competitors and the strengths these cities have to offer in terms of attracting investment, achieving economic growth and protecting the wellbeing of their residents.”

As Scottish Development International’s Mark Hallan noted at the Foreign Direct Investment Forum (see related post), Scotland has gained a reputation for bringing the public and private sectors together around an investor when they arrive – which adds tremendous value for these companies.

Michael Henderson
Michael Henderson says that Scotland has a unique approach to setting out a blueprint for smart cities

“Definitely the best sales message that you can send investors is the personal endorsement of someone who has been here, bought into the vision and has been welcomed by the community – perhaps with their kids at school in the city, a network of friends and, ultimately, a business that’s thriving and can source the skills that they need,” says Henderson.

Looking at the Scottish Cities Alliance, Henderson is encouraged by the Scottish Government’s resolve to enhance the offering for investors. “A lot of public investment is going into Pathfinder programs,” he says. (For example, the $86.3bn North Broadband Project was one of the largest collaborative broadband procurements in Europe.) “The blueprint is one of cooperation and collaboration, which is important,” Henderson adds.

Turning to infrastructure, he notes that for investors, one of the key requirements is transport connectivity. Large capital projects in recent years have hugely enhanced this, with the completion of the Queensferry Crossing, a third bridge linking Edinburgh to the north, and the electrification of the Glasgow to Edinburgh railway line. Major improvements have also been made to the freeway system in central Scotland, and work is ongoing on converting the A9 road to the Highlands to a divided highway.

This connectivity increasingly involves development of Scotland’s ‘smart cities’, a focus of the SCA.

Henderson says: “Scotland has a unique approach to setting out a blueprint for smart cities, with the SCA ensuring that all seven of our cities collaborate to achieve a better quality of life for those living and working there, and a thriving local economy by improving efficiency, leveraging economies of scale and facilitating social drivers such as health and wellbeing.”

He is also encouraged by the level of engagement and transparency in achieving these solutions. “Technology is very important, but we must avoid digital exclusion and deploy technology to improve overall prosperity and promote equality,” he adds.

Scotland is moving toward a low carbon economy. As long ago as 2009 the Scottish Parliament passed the most ambitious legislation anywhere in the world to tackle the global problem of emissions, and its latest Climate Change Plan anticipates a 66% reduction in emissions by 2032.

Shepherd and Wedderburn, says Henderson, has been involved in mold-breaking district heating projects, including acting for West Dunbartonshire Council in an innovative new project at Queens Quay in Glasgow.

This project will see water extracted from the River Clyde and heat extracted using heat pumps, which will then be directed to businesses and homes via a district heat network. This will continue to be an interesting area for lawyers as there are some challenging legal issues around generation and supply, and the possible regulation of future heating.

Among other projects in which Shepherd and Wedderburn has been engaged, says Henderson, is the delivery for client BOC (part of Linde AG) of an innovative hydrolytic electrolysis plant to generate hydrogen 24/7 for Europe’s largest fl eet of hydrogen fuel cell buses. This forms part of Aberdeen City Council’s H2 project involving joint ventures with Stagecoach and First Bus (see related post on cleaner travel).

This type of project, he points out, requires substantial public subsidy up front and data analysis to leverage the most from the investment.

Henderson also highlights the continuing development of the ‘intelligent’ building; defined as one that is responsive to the requirements of occupants, organizations and society, is sustainable in terms of energy and water consumption, and is low on the emissions scale.

“There is an ongoing move in this direction, but clearly this is not going to happen overnight,” he says. “Adoption of new technology in construction projects takes time, and while sustainability and efficiency are important, these buildings should also support the wellbeing of the people who occupy them.

“There are a host of innovative features being incorporated into new buildings, or retro-fitted into older stock, which improve our consumption of resources – examples include LED lighting that is operated by motion sensors which save energy, and using the roof to site solar panels and to collect water that can be used to flush lavatories.

“It’s a complex area and one that can’t be ignored because a large proportion of carbon emission comes from the built environment. Anything we can do to improve that will have a similarly large effect on the overall outcome.”

All of this, of course, enhances Scotland’s offering for overseas investors. “We have a business environment that is positive but something that currently characterizes foreign direct investment is its focus on the central business districts of Edinburgh and Glasgow, with some exceptions elsewhere,” says Henderson.

“However, the business stream and current projects we are seeing at the moment are very positive indeed.”