Imagine a country that owns a beautiful island, a strip of coastline, a desert region or a devastated urban area. The asset may be worth billions in potential, yet very little in its current state. Turning it into a city, a resort district or an economic hub requires roads, electricity, water, transport, hotels, housing, digital infrastructure and, above all, capital the state may not have.
Once, the model was simple: the state built infrastructure and waited for investors. Now, a different model is emerging. The state provides the territory and sovereignty. Private capital provides the money, technology and, in some cases, part of the governing framework. The city is no longer merely where investment happens.
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The city itself becomes the product. Peter Thiel, the American technology entrepreneur and investor who co-founded PayPal and was one of Facebook’s earliest outside investors, is also known for his libertarian ideas about governance, innovation and new social frameworks beyond traditional state structures.
As early as 2009, Thiel was writing about creating new spaces beyond existing political systems. The ideas that developed around this thinking helped popularize seasteading, charter cities and startup cities. Pronomos Capital, a fund backed by Thiel and others, expresses the concept with striking simplicity: “the city is the product.”
If the city is a product, institutions become infrastructure. Regulation becomes code. Governance becomes a service layer. Residents are not only citizens, but also users, customers and sources of data.One of the most advanced experiments is taking place in Próspera, Honduras.
Próspera operates under a special legal framework originally created for the country’s ZEDE zones. It is not an independent state, but neither does it function like an ordinary municipality. Businesses can register digitally, operate under a distinctive tax and regulatory system and use dedicated dispute-resolution mechanisms.
In practice, it resembles governance as a platform. According to Próspera’s own figures, more than 200 companies have registered there and over $100 million has been invested. That is enough to turn a philosophical proposition into a real-world experiment.
Then came the part that technologists find much harder to write into code: politics. A subsequent Honduran government moved to repeal the framework that enabled the ZEDE zones, and in 2024 the country’s Supreme Court declared it unconstitutional. Próspera argues that protections granted to existing investors remain valid, and the dispute has moved into international arbitration.
That conflict exposed the central problem beneath every city-as-platform model: law can be written like code, but who owns the server on which that code runs? A different version of the same logic is emerging in Albania.
Sazan Island, once a closed military base in the Adriatic, is now the focus of a luxury tourism development estimated at more than a billion dollars. Hotels, villas, residences and marina infrastructure are planned for a place where the state itself would have struggled to justify investment on such a scale.
The island remains state-owned, but private capital is expected to create much of its future economic value. For many governments, the attraction is obvious.
The world is full of places with enormous latent value: abandoned ports, islands, former military zones, remote coastlines, border regions, post-industrial districts and territories damaged by war or natural disaster. The state owns the land but lacks the money, execution capacity or political incentive to transform it into an economic engine.
This is where the city-as-platform stops being a libertarian thought experiment and begins to look like a business model.
Instead of privatizing a single road, utility or development parcel, governments may increasingly enter partnerships in which private capital helps build the entire economic ecosystem around a territory. And Gaza may become the most extreme version of this possibility.
The cost of reconstruction was estimated in 2026 at roughly $71 billion. Much of its physical infrastructure will need to be rebuilt. Proposals discussed in recent years have included special economic zones, AI-enabled infrastructure, digitally managed services and new mechanisms for administering reconstruction finance.
None of this means Gaza will necessarily become a platform city. But it shows why the model is so compelling. When a place must be rebuilt almost from scratch, governments and investors are no longer limited to reconstructing yesterday’s city. They can design an entirely new operating layer from the beginning: digital identity, payments, mobility, energy, regulation and public services, all connected within one system.
That can create enormous efficiency. It can also create enormous power. There is a historical precedent worth remembering. In the late nineteenth century, the Pullman Company built an entire town outside Chicago for its workers. The company provided the housing, stores and public environment. At first, Pullman was praised as a model of modern efficiency.
Then an economic crisis hit. Wages were cut, rents remained high and workers discovered the danger of living in a place where the same entity was their employer, landlord and manager of the surrounding urban environment.
Dr. Bella Barda Bareket Photo: Lia YaffeThe technology of the twenty-first century allows that concentration of power to go much further. A digital platform can know where residents travel, what they buy, which services they use and whether they qualify for access to particular systems. It can adjust prices, permissions and incentives in real time.
This is why the next generation of city-building raises a question far larger than urban planning. It raises a question about sovereignty.
If a private investor finances the infrastructure, operates the digital systems, manages services and helps shape the regulatory environment, what exactly has the state granted? A development right? A business opportunity? Or a small piece of sovereignty?
For investors, the opportunity is potentially immense. A traditional developer earns money by building and selling or leasing property. A platform-city operator could potentially capture value from property, utilities, mobility, data, financial services, energy, tourism and business formation at the same time.
The prize is no longer just the land. It is the economic activity that happens on top of it.This may become especially attractive to countries that own valuable but underdeveloped territories and cannot afford to unlock their potential themselves. If the model works, territories once viewed as liabilities can become valuable economic platforms.
If it fails, the consequences may extend far beyond an unsuccessful real-estate project.Because a failed hotel can close. A failed technology company can go bankrupt. But when the product is a city, the customers cannot always simply log out. For two centuries, politics has revolved around one central question: who governs the state? The defining question of the coming urban era may be different: Who owns the operating system of the city in which we live?
- Dr. Bella Barda-Bareket is an entrepreneur and a macroeconomic and geopolitical analyst.