Research - NOVEMBER 6, 2017

Infrastructure continues to attract global investors

by Andrea Waitrovich

International institutional investors have demonstrated strong demand for infrastructure, including record levels of interest in emerging market infrastructure, with 37.5 percent of all investors now active in these growing markets, according to a new survey by the Global Infrastructure Hub.

Investors are the most optimistic about the pipeline of projects in emerging markets — 85 percent of investors believe this pipeline will grow. In addition, the Americas was nominated as the key region to watch with strong expectations for the United States and Latin America. The United Kingdom was rated the second most active infrastructure market among the OECD countries, after the United States.

The survey also found that national infrastructure plans, developed by governments around the world to guide new infrastructure development, were useful to investors.

But investors strongly indicated they needed more asset-level data from governments to inform their investment decisions.

The world’s largest and most representative investor survey, Investor Perceptions of Infrastructure 2017, undertaken by the Global Infrastructure Hub (GI Hub) and EDHEC Infrastructure Institute-Singapore (EDHECinfra), received responses from 186 investors representing $7 trillion in assets under management — about 10 percent of the global investor community.

The survey was undertaken last year with the intention to conduct it annually.

According to the findings, 90 percent of investors want to increase allocations, up from 65 percent from last year, while 38 percent of investors are currently invested in emerging market infrastructure, with more than 85 percent of these investors keen to expand their investment.

The top five future OECD markets rated by respondents are the United States, United Kingdom, Australia, France and Canada, while the top five emerging markets are Indonesia, India, China, Mexico and Brazil.

Some 75 percent of respondents had heard of national infrastructure plans in OECD countries, and there was notable support for the plans. Meanwhile, 46 percent of investors say the lack of data on operational performance was a limiting factor in their investments, while 84 percent agree benchmarking operational performance and financial performance would add value for infrastructure investors.

GI Hub CEO Chris Heathcote said that the findings were positive for countries seeking investment in public infrastructure programs.

“The GI Hub’s Global Infrastructure Outlook findings tell us that governments will need to spend more than $97 trillion across the globe by 2040 to provide adequate infrastructure to expanding populations,” said Heathcote. “Private finance will play an important role in funding that much-needed infrastructure. This survey confirms there is a growing appetite amongst the most prominent global investors for investment in infrastructure. This is a message to governments across the globe — prepare a robust pipeline of viable projects to attract that private finance. And there is another message here for governments: national infrastructure plans are well regarded by investors that know about them.”

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