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Real Estate and Infrastructure: The case for income-producing real assets
Real estate and infrastructure enjoy a symbiotic relationship. Real estate comprises the structures in which life and work take place, and infrastructure connects and powers that life and work. Both are familiar and recognizable asset classes for both retail and institutional investors. If we reflect on an average day, our economic and social activities are intertwined with the use of both real estate and infrastructure assets.
The essential nature of these asset classes — the inelasticity of demand — bestows them with their attributes of growing income and capital stability. These assets are also driven by many of the same underlying factors from an investment performance perspective. Both real estate and infrastructure derive their value from economic rents generated by the ownership of tangible assets. Both investment classes focus on tangibility, which provides an element of downside protection. And both asset classes may provide long-term cash flow stabil