7 Reasons the Inward Investment Cycles Take 7 Years

Seven years is an arbitrary figure for a catchy title, but the fact of the matter is that large-scale inward investment projects take a long time to come to fruition and start generating tangible benefits for the local economy where they are located.

As Stephen Silvester, Inward Investment & Infrastructure Manager at Invest East Yorkshire, explains, people often only see the headlines when a project is about to start — but that moment is usually the culmination of years of behind-the-scenes work from the company and the organisations supporting them, like Invest East Yorkshire.

Below are the 7 reasons the inward investment cycle often takes seven years — and why it’s worth the wait:

1 – Due Diligence and Risk Assessment

Investors need time to thoroughly assess the market, economic conditions, regulatory framework, and political stability of the target country. Historically the UK has always been seen as a relatively safe bet in this regard but recent events such as Brexit and the downgrading of our sovereign debt rating has negatively impacted this status. 

Legal and financial due diligence ensures compliance with local laws and minimises risks.

2 – Regulatory Approvals and Bureaucracy

The UK Government, like many advanced economies around the world have complex approval processes for foreign direct investment (FDI).

Planning permission, licensing, permits, environmental impact assessments, and sector-specific regulations can delay investment decisions.

Bio-Diversity Net Gain (BNG) is a recent example of this whereby developers have to leave habitats in a measurably better state than before development, aiming for a 10% increase in biodiversity. This is now a mandatory planning condition in England (coming into effect on the 12th February 2024 for major developments), and has implications for developers, landowners, and local authorities as it impacts site viability due to increased planning obligations and resource allocation.

Sites near the Humber Estuary also face additional environmental viability challenges if they are functionally linked to this Special Protection Area (SPA) as mitigation land may be required to compensate for loss of habitat area.

3 – Market Research and Feasibility Studies

Investors conduct extensive research to evaluate demand, competition, and profitability.

Site selection, workforce availability, and infrastructure considerations take time to finalise.

4 – Negotiations and Deal Structuring

Deals often involve multiple stakeholders (government bodies, local businesses, suppliers, etc.), leading to prolonged negotiations. 

Tax incentives, land acquisition, and partnership agreements require careful structuring. 

For example, the Humber Freeport and the Hull & East Yorkshire Combined Authority are massive inward investment opportunities for the region, but it has taken years of negotiations and stakeholder engagement to get to this point and lots of work (organisational structures, roles and responsibilities etc) still has to be done.

5 – Capital Allocation and Funding

Securing funding, whether through internal capital, loans, or investors, is a time-intensive process.

Exchange rate fluctuations and economic instability can delay financial commitments.

6 – Construction, Setup and Operational Readiness

If the investment involves building factories, offices, or infrastructure, these physical developments take years to complete.

Hiring and training a local workforce adds to the timeline.

7 – Government Policies and Economic Conditions

Changes in government, policy shifts, or economic downturns can lead investors to pause or rethink their strategies.

Investors may wait for favourable tax policies, trade agreements, or infrastructure improvements before committing.

The recent tariffs imposed by US President Tump and the resulting treat of a trade war is a pertinent current example on how global macro-economic conditions can rapidly change the Inward Investment landscape.

The 7 reasons are not listed sequentially and constantly overlap and change priority in the delivery of large-scale inward investment projects. The Invest East Yorkshire Team has built up years of experience dealing with these complex issues and stakeholder relationships, and should be the first port of call when considering investing in the area. 

Want to find out how we can support your investment journey? Visit our Inward Investment page to explore how we help businesses locate, grow, and succeed in East Yorkshire.