Yasir Zada KHAN*, Mumtaz Anwar CHAUDHRY** and Bilal MEHMOOD***
Abstract
Urban expansion in Lahore, Pakistan, is increasingly driven by speculative investments in non-productive assets such as land plots and real estate, leading to inefficient urban sprawl, infrastructure strain, and limited economic productivity. This study examines the behavioural, financial, institutional, and urban factors influencing investment choices among youth, employees, and business owners in Lahore, drawing on survey data from 641 respondents. Employing multinomial logit models for stated preferences and fractional logit models for revealed portfolio shares, the analysis reveals that higher financial literacy promotes productive investments (e.g., business ventures and skill development), while family influence, herd behaviour, and urban effects like quality of life, perceived car-oriented planning, and sprawl cost perception favour non-productive assets. These patterns exacerbate sprawl and hinder agglomeration benefits, with notable heterogeneity across groups (herding effects are concentrated among youth, while institutional and quality-of-life effects are more pronounced among business owners). Policy implications emphasise regulatory reforms, such as easing zoning restrictions and incentivising dense, mixed-use development, to redirect capital toward sustainable urban growth. Findings contribute to understanding investment inertia in developing cities and support strategies for resilient, inclusive urbanisation.
