Increase in private infrastructure investing trends by 2030

Glass facade of Canada’s National Gallery. Wikipedia Photo

MANILA — Following the  rapid increase of institutional investors investing in private infrastructure, a data forecast showed that by 2030, more than $50 trillion will be invested in infrastructure development across Canada.

One factor affecting this increase is the fact that the government no longer has enough budget to build infrastructures that are crucial in improving the economy, which includes schools, roads, hospitals, waste and water treatment plants, and power distribution grids.

Based on records, pension funds dominated investment in infrastructure assets especially in Australia and Canada.

This translates to 40 percent of historical allocations from 7 percent of total potential available capital. For instance, pension assets in Canada amount to US$ 1.6 trillion in 2013, while the infrastructure allocation amounts to US4 47.2 billion. Meanwhile, pension assets in the United States amount to only US$25.4 billion.

Canadian pension funds have apportioned 4 percent of their budget to infrastructure.  Most of which are allocated to core, income-producing infrastructure.

Recently, trends showed an increase of investments in infrastructure, both in investor location and type. Pension funds allocation is already at 72 percent.

Given this, concerns regarding pricing discipline are being raised because of competition. For those entering the asset class, it is vital to understand the investment strategies and drivers to generate returns.