We are seeing a deep convergence between the real estate and infrastructure asset classes. This convergence is being driven by a number of factors, but it risks obscuring a clear view into the risks in investors’ portfolios. Even as the assets are becoming harder to classify, the risks associated with them are not necessarily becoming interchangeable.
Historically, real estate and infrastructure were clearly delineated, with little crossover between the asset classes or the teams involved. Real estate was a property business, developing buildings and collecting rents from offices, retail centres, apartment communities or warehouses. Infrastructure encompassed the essential systems and services that underpin economic activity, from roads and airports to utilities and energy networks. But current economic themes, from digitalisation to urbanisation, have pressed more investments to cross that border and sit at the intersection of the two asset classes.
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