In many countries, particularly developing ones, there is a significant wave of industrialization and an increase in wages.
Developed countries, meanwhile, have older infrastructure that are continually becoming rundown and depreciating in value, requiring repair or even replacement. In Minneapolis in August 2007, the Interstate 35W Bridge collapsed, an incident underscoring the need to address aging infrastructure.
Investment experts now see infrastructure as a bankable sector. The McKinsey Global Institute estimates that over the next 15 years, $57 trillion worth of capital would be needed for infrastructure.
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| Image source: workplaceinsight.net |
The challenge that presently besets various investor groups is the apparent lack of attractive projects. Limited partners, multilateral institutions, development-finance organizations, and sovereign-wealth funds readily pursue such investment projects, as long as they immediately see the profit opportunities in these.
Several emerging markets are presenting themselves now for infrastructure investors, such as the following:
Greenfield assets
A greenfield asset is a type of foreign direct investment that involves developing operations and constructing infrastructure in a foreign country from scratch. Although the risks are relatively high and returns can be difficult to assess, the reward for such an investment can be substantial.
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| Image source: sarch3d.com |
Overlooked public assets
Reforming or privatizing government-owned infrastructure or properties can be complex, especially the operations and labor situations. But investing in these types of assets has so far yielded significant returns.
Lisa Dudzik of Perth, Australia works as a contracts and claims manager, having overseen large-scale construction projects across various industries. Read more insights about infrastructure by visiting this blog.
