PM Network - March 2015

Lavasa aims to take advantage of its proximity to Pune, a booming software hub 40 miles ( 64 kilometers) away. Konza Techno City, Kenya, a US$14.5 billion development, will be 37 miles ( 60 kilometers) from the capital of Nairobi.

China has offered a counterpoint lesson. As many cities have sprung up in remote areas, the country has seen an epidemic of ghost towns—newly constructed urban centers that did not attract businesses and residents and now sit largely empty. “These Chinese cities were built mainly as speculative housing projects, not necessarily corresponding to where people want to live,” Dr. Ben-Joseph says.

It may seem counterintuitive to build a new city near another, more established one, but such urban clusters carry distinct advantages. “You can benefit from and complement the social and economic dynamics of the metropolis. This makes the new city much more attractive for companies and the types of tenants they envision hosting,” says Luis Carvalho, PhD, senior researcher, European Institute for Comparative Urban Research, Rotterdam, the Netherlands.

To help future residents and businesses appreciate the allure of their city over others, project sponsors must coordinate with nearby cities to make sure they’re complementing others’ appeal, not duplicating it. “Many new cities are designed to provide heavy incentives to lure companies, but those are often insufficient to match the social advantages of other places, let alone the fact that they can hardly be kept over time,” Dr. Carvalho says. “This would call for the integration and coordination between the new city and other nearby locations, to avoid negative-sum competition for companies and tenants.”