The landscape of infrastructure investment is rapidly evolving, with geopolitical risks and heightened economic uncertainty becoming tangible realities rather than low-probability scenarios. While we haven’t seen immediate impacts on real assets, the likelihood of these challenges arising is increasing. The silver lining? Infrastructure continues to demonstrate resilience compared to other asset classes, and it's poised to attract capital seeking greater visibility and long-term, predictable cash flows in uncertain times.
Liliana Pereira, Ian Sample and Adam Zalma represented Steer at the Infralogic Investors Forum, where they engaged with industry leaders and discussed emerging trends shaping the future of infrastructure. Below are some of their key takeaways from the event:
- Key terms: Digitalization, Decarbonization, and Deglobalization were frequently highlighted throughout the conference. At the same time, a broader and more nuanced “energy transition” is gaining prominence, overshadowing the previously dominant “decarbonization” megatrend.
- Inflation and Sector Bright Spots: Despite the ongoing concern about inflation, the energy and transport sectors continue to shine. While the renewables sector may experience volatility as investors shift focus from government incentives to economic fundamentals, its long-term trajectory remains strong. Transport investment faces challenges due to complexity, long time horizons, public acceptance needs, and multi-government layers, but still offers solid returns driven by fundamental demand. On the freight side, reshoring is prompting a shift in investments, moving from global-centric hubs like LA/Long Beach to smaller regional hubs and ports.
- Government Engagement & Asset Recycling: Private sector expertise is proving vital for ensuring continuity in infrastructure projects. Additionally, asset recycling is emerging as a powerful mechanism for unlocking investment opportunities.
- Infrastructure Investment on the Rise: Although we’re in the early stages of infrastructure expansion, a significant challenge remains: the supply of investable assets is lagging behind demand. Add-ons to existing deals could offer stability in the short term.
- AI & Innovation in Infrastructure: AI is rapidly becoming a critical tool for optimizing infrastructure assets, such as real-time route optimization and congestion management. However, AI adoption in the transport sector may take longer than expected, with dynamic tolling potentially being one of the first breakthroughs.
- Opportunities & Strategic Positioning: With several toll road projects in pipeline, there is growing momentum including promising P3 opportunities with State and Municipal sponsors. As the energy transition remains a focal point and ports and airports revitalization continues to gain traction, infrastructure investing is at a pivotal moment of evolution. The road ahead is complex, but opportunities abound for those strategically positioned.
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