Trends in infrastructure: An evolving asset class

Investment Rating - The report indicates a positive outlook for infrastructure investment, with 70% of respondents expecting an increase in fundraising and investment activities over the next 24 months, and 30% anticipating a substantial increase [3][10]. Core Insights - The infrastructure asset class has experienced significant growth, with a compound annual growth rate in assets under management averaging 16% over the past decade, reaching over USD 1.1 trillion [2][6]. - The global infrastructure gap is estimated at USD 15 trillion through 2040, necessitating increased private financing to bridge this gap [2][18]. - Key drivers for future investment include the energy transition, digitalisation, and demographic changes, with 54% of respondents identifying energy transition as a primary investment catalyst [3][24]. Summary by Sections Part 1: Infrastructure: Into the Mainstream - Infrastructure has become one of the fastest-growing asset classes, with M&A activity increasing from 551 deals valued at USD 148.5 billion in 2015 to 2,105 deals worth USD 658.4 billion by 2022, representing increases of 282% in volume and 343% in value [7][6]. Part 2: Key Driver 1: The Road to Energy Transition - The International Energy Agency (IEA) projects that annual investments in renewable energy need to triple to around USD 4.5 trillion by 2030 to achieve net zero emissions by 2050 [25][26]. - Solar photovoltaic (PV) and onshore wind are expected to attract the most investment, with 61% and 58% of respondents indicating these technologies as priorities [27][28]. Part 3: Key Driver 2: Digital Watch - Digitalisation is viewed as a primary investment driver by 36% of respondents, particularly in Europe, where it surpasses the energy transition in importance [37][38]. - Data centre investments reached USD 22 billion in the first five months of 2024, indicating strong growth in this sector driven by cloud computing and AI [40][41]. Part 4: Regions in the Spotlight - The Middle East is identified as the most attractive region for infrastructure investment, with 60% of respondents viewing it as highly attractive due to political stability and ambitious development plans [3][10]. - North America and Europe are expected to see the greatest investment in digital infrastructure, with 62% and 61% of respondents respectively indicating this trend [38][42]. Part 5: The Healthcare and Social Deficit - The COVID-19 pandemic has highlighted significant deficits in healthcare and social infrastructure, prompting 35% of respondents to expect increased investment in these sectors, particularly in the Asia Pacific region [3][10]. Part 6: The Sustainability Imperative - ESG considerations are becoming increasingly significant, with 47% of respondents expecting the importance of ESG to grow significantly in the next two years, particularly in Africa and APAC [3][10]. Part 7: A Journey to the Core - Investors are increasingly focusing on core infrastructure assets for their stability and predictable cash flows, with 66% planning to increase exposure to core-only assets [3][10]. Part 8: Risky Business - Geopolitical risks remain a top concern for infrastructure investors, with 35% citing these as the biggest potential impediment to investment [3][10]. Part 9: Tackling a Risky Business - Investors are employing proactive asset monitoring and management strategies to mitigate risks, with at least two-thirds of respondents relying on these methods [3][10]. Part 10: Conclusion: Where Do We Go From Here? - The report concludes with cautious optimism for a continued rebound in infrastructure investment, supported by stabilising interest rates and the pressing need for renewable energy infrastructure [5][10].