Kolkata offers 'mystique', the magical ingredient of superprofits

There's an old adage in London stockbroking circles; "buy on mystery, sell on history". Old wisdom is far from redundant, despite what the internet brats and their investment-banking cheerleaders may have thought.

Like corporations, cities win and lose investment on image and performance. Which comes first? Image without performance only lasts long enough to lose your money. But can you have performance without image?

When multi-national corporations ask where they should set up operations, our preferred half-dozen is Mumbai, Delhi (Gurgaon), Chennai, Bangalore, Hyderabad, and Calcutta (as we still call it). Personally I would put Calcutta on top. Calcutta? Surely, it is the epitome of 'Old India': socialist, strike-prone, decaying, and a leader only in imagery of depravation and poverty?

Well, Calcutta scores surprisingly well on conventional business location variables: cost, quality, and longer-term depth and flexibility of labour; Investor-friendliness; telecom infrastructure; power, water, public and private transport, including airport capacity; cost and availability of commercial and residential property.

But despite some high-profile success stories, Calcutta doesn't normally get on to the short-list of inward investment locations because of three reasons: image, image and image. Which begs two questions. First, can a wholly negative image continue to prevail, even if the actuality is far better? And second, even if the image is unfair or misleading, can it be changed? Cities don't lend themselves to a media quick fix.

Calcutta's underlying image problem is far more with the 'home team'. Time and time again I hear my Indian friends express incredulity when we suggest that Calcutta is a massive money-making opportunity. They still see Calcutta as a city where ''the bosses pretend to pay the workers, the workers pretend to work".

But more than anything measurable, Calcutta offers 'mystique', the magical ingredient for super-profits. Mystique is by definition a slightly intangible quality, but one that grabs the imagination of the investor who likes to think they can spot trends which others have overlooked. There are the hidden trends that I see in Calcutta:

• A sense of place, based on an architectural heritage that is not just awesome to look at, but which provides the kind of flexible and sustainable space for business, leisure and housing, which nowadays is a key ingredient of any vibrant city in the West. In two words 'funky' and 'practical'. Enduring fashions have to comfortable, have to be fun.

• Media and culture, higher education and a rapidly-emerging youth culture. Calcutta's broadcasting, publishing, and cultural heritage is world-renowned, but largely insular. The media is a worldwide growth industry. Calcutta has the skills to join the world's roll-call of cultured cities, but does it have the will power and the mindset?

• A massively under-exploited home market, highlighted by the huge success of the new shopping malls, which only two or three years ago were deemed unviable by sceptical outsiders. Calcutta is beginning to rediscover its economic strength.

• Visionary business leaders. Take property development. Bengal Ambuja's Udayan complex is so advanced in terms of combining commercial imperatives with social inclusion, that I use it at presentations in London as an exemplar of best practices. My audiences are astonished that such a place is in Calcutta.

• Calcutta has all the ingredients to share fully in the success and growth of New India. That brings us back to image. The city's leaders, business, cultural, and political, have to work out how to promote an image which makes certain that Calcutta is always on the short-list of investment locations. It's not easy, but it can be done.