High investor demand for infrastructure assets

Public and private investors are increasingly looking for the inclusion of smart technology when assessing infrastructure investments, according to the findings of MUFG's inaugural EMEA Infrastructure Report. Almost three quarters of those polled are interested in smart infrastructure, which involves wide-ranging data collection and analysis of physical projects with the objective of enabling more informed decision making.

Of the countries that are already leading the way for smart infrastructure, Germany, France, United Kingdom, Netherlands and United Arab Emirates topped the table.

Yet smart infrastructure is not yet widely adopted on projects. MUFG's report has identified three major hurdles that need to be overcome for smart infrastructure to become mainstream:

  • Discrepancies between public and private funders – 82 per cent of public funders believe private investors are willing to pay a premium for smart technology's ability to control costs and increase operational efficiency. However, the majority (71 per cent) of private investors are concerned about recouping these upfront investments.
  • Obsolescence is a concern – 84 per cent of private investors believe that obsolescence is a risk given the rate at which technology is developing. In response, 80 per cent are looking to reduce their asset recycling timeframes
  • New method of risk analysis is needed – 77 per cent of private and public investors recognise that current risk models need to change to properly assess smart infrastructure projects.

MUFG's report finds that there is high demand for infrastructure assets amongst the vast majority of EMEA investors (62 per cent), with 70 per cent predicting demand will increase for the rest of 2018 and throughout 2019. Only 1 per cent think interest in the sector will retreat.

Phil Roberts, Head of Investment Banking Division for EMEA at MUFG, said:

"Smart infrastructure has the potential to transform the infrastructure environment, making existing assets more useful and more cost-effective, while enabling previously impossible features within new builds.

"As a consequence, we at MUFG believe that smart infrastructure has the ability to provide increased certainty, efficiency and better returns. But more needs to be done to bring together the public and private sector to overcome common hurdles. In particular, more effective sharing of knowledge and data will allow investors to improve the ways in which they assess projects and allocate risk."

Top 10 countries believed to be leading on smart infrastructure

1. Germany
2. France
3. United Kingdom
4. Netherlands
5. United Arab Emirates
6. Spain
7. Italy
8. South Africa
9. Belgium
10. Ireland

Survey methodology

300 interviews were carried out with investors across EMEA infrastructure, conducted throughout H1 2018. 200 of the participants were private sector investors deliberately selected from a blend of institutional investors, investment funds and non-financial companies which also invest in infrastructure as part of their corporate strategy, primarily technology firms, telecommunication businesses and contractors. The other 100 research participants were responsible for public investment decisions in relevant central government departments or specialist transport departments and ports authorities. All were leading decision makers involved in choosing which infrastructure projects to invest in within their organisation.

Download the Smart Infrastructure Report 2018

To download a copy of the report, visit the Smart Infrastructure Report home page.