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GIIA features in new CBRE quarterly review

Our CEO Jon Phillips sat down with the CBRE team to discuss findings from our Pulse Survey, conducted alongside Alvarez & Marsal

Infrastructure Quarterly, compiled by our members CBRE, looks at the major trends shaping infrastructure investment around the world, delving into key developments within the fast-growing digital, power and transport sectors. 

As part of its Q2 2023 edition, the authors spoke to our CEO Jon Phillips about latest findings from our half-yearly member research. 

The full Q&A can be read below. 

Let's start with a brief background on the purpose of the Pulse and what the latest survey uncovers in terms of infrastructure investor sentiment?

Our Pulse survey is a twice-yearly snapshot of attitudes among our members, who collectively hold $1.6 trillion in infrastructure assets. The survey tracks investor sentiment by market and by sector, as well as capital raising and barriers to delivery. High inflation and borrowing costs have played a big part in shaping investment strategies over the first half of 2023. They are also significantly impacting sentiment towards borrowing and fundraising, which has turned negative for the first time since we launched the survey three years ago.

Interestingly, despite these concerns about raising funds and debt, close to half of infrastructure investors expect strong deployment of $1 billion or more in equity in the next 12 months. Why is that and what are the preferred strategies?

With its long-term outlook and stable returns, infrastructure as an asset class is demonstrating its resilience in challenging circumstances. The proportion of our members planning to deploy $1 billion or more over the next year is up this quarter, as is the number planning to divest. The Pulse points to an overall shift from "core" assets, where returns may more closely track currently high risk-free rates of return, towards "core plus" investments where more significant growth in asset values is targeted alongside yields.

On the bright side, the Pulse findings likely indicate that the gap between seller and buyer expectations is narrowing. Let's talk a bit more about risks. What are the main considerations around, and barriers to, infrastructure investment?

Our members flag borrowing costs as on par with inflation as the top risk to both existing portfolios and new investment opportunities. With regards to environmental, social and governance considerations, it's now supply chain management which is perceived as the greatest challenge to delivery of best practice, just ahead of climate change. On the policy side, regulatory reform is our members' top ask of governments, alongside climate friendly incentives and creating market frameworks which stimulate demand.

Last year, we wrote extensively about the investment tailwinds due to the Inflation Reduction Act in the U.S. and energy security considerations in Europe. What is the Pulse showing in terms of the attractiveness of different regions?

The U.S. is now streets ahead of all the other markets we survey across Europe and the Americas in terms of member appetite to invest. The country's green incentives are proving especially effective, with four in 10 GIIA members planning to deploy at least $5 billion in net zero investments across the country over the next five years, compared to just two in 10 in Europe. Canada and large parts of Northern Europe also score highly, whilst the U.K. is still recovering from a huge drop in sentiment last autumn. Members state that "political instability" and an "unattractive regulatory regime" are considerably bigger barriers to investment in the U.K. compared to North America and the rest of Europe.

The full Q2 2023 Infrastructure Quarterly report is available to read on CBRE's website and can be downloaded directly from this page.