It's a market obsessed with making short-term returns. As a result, the past decade of what is perceived as ?regeneration? has been dominated by speculative investor bulk-buying, killing off any chance of creating vibrant communities resulting in a legacy of absentee owners, and an oversupply of one and two bedroom identikit apartments.

You can't blame the house builders, developers or agents; after all, they represent the private sector which has to answer to shareholders who want to maximize annualized profit.

But what about the next 20, 50 or 100 years? Is such a short-term approach really the best financial model? Does it create vibrant and healthy communities and great urban places? The answer to these questions has to be no.

Until we adopt a long-term approach to creating communities and vibrant places rather than an obsession with buildings and short-term profit, the property market will not deliver sustainable city living in line with the European approach. I believe the answer lies with the larger financial institutions and the public sector. Both can afford to think long-term, as they don't answer to private shareholders.

Currently, property only represents a small percentage of pension funds? total investment. Traditionally, the financial institutions have avoided more exposure to property perceiving it to be volatile and management intensive. However, the city's financial institutions are now starting to look at property as a long-term alternative for the creation of excellent returns. Morley, one of Europe's largest property fund managers, set up The Igloo Regeneration Fund in 2002. This is the UK's first urban regeneration fund investing for a commercial return in mixed use, environmentally sustainable, well-designed regeneration projects on the edge of the top 20 cities in the UK. The fund is managed by Morley on behalf of Norwich Union without pressure from shareholders.

The public sector is also starting to recognize that it can take a long-term approach to value creation and the generation of public benefit through quangos like Communities England (English Partnerships and the Housing Corporation) and British Waterways. For example, British Waterways established ISIS Waterside Regeneration at the 2002 Urban Summit held in Birmingham in order to use its assets to create long-term returns and sustainable new waterside destinations. ISIS is now revitalising more than 170 acres of land in seven towns and cities across the UK, designed to attract a wide range of occupiers, including families. Icknield Port Loop, one of the most significant regeneration opportunities this decade is one of these sites.

When the public sector take this long term approach, they often are faced with a dilemma given the need to cover short term costs, for example British Waterways are responsible for a 200 year old system that constantly needs to be maintained and suffers from years of under-investment. The current costs are more than British Waterways receive. British Waterways require consistent funding to be able to maintain the waterways for public benefit and as a catalyst for regeneration without having to sell off the family silver. Over the past weeks the national news has reported that it may be privatized; this would be a huge shame. British Waterways has the opportunity to continue to act as a force for good in regeneration, rather than being forced to dance to the tune of the shareholder.

We need to encourage the government and financial institutions to get behind the property market and set up more of these funds. We only need to look to northern Europe for an example of how this can work very successfully.

In the UK, young people have a stark choice ? 25 year mortgages are likely to be replaced by much longer terms and if the idea of creating huge debts for others to inherit is not attractive they are forced to rent average quality and poorly designed apartments from private, relatively unregulated landlord. If pension funds invest in well designed apartments built as part of a thriving community and well managed by responsible investors such as Morley, places with long-term value can be created, which occupants can then buy-in to as part of their pensions.

This will be a challenge, as we need to overcome the stigma of renting on a long-term basis. In addition, if pension funds do invest in developers like ISIS, which puts sustainability at the heart of its approach, there is an opportunity for large numbers to acknowledge and address the challenge of climate change. If there were more communities living in residential schemes like ISIS ones which have sustainability built-in to the very fabric of the development, then a critical mass could develop into combating the effects of climate change.

An excellent case study of how the public sector can work with long-term funds, as I have described, is represented at Icknield Port Loop. Birmingham City Council, Advantage West Midlands and ISIS together with other key stakeholders are bringing forward plans to put this long-term approach to community and value creation into practice. It can't come soon enough.