The best bets for infrastructure investment | Institutional Real Estate ...

In December, London-based ?built asset consultancy? EC Harris published its Global Infrastructure Investment Index: Move from Risk to Reward, a report that ranks infrastructure investment markets.

?Investors and asset owners need to be wary of the differing risks and potential opportunities each market presents them with,? the report notes. ?Our Global Infrastructure Investment Index report analyzes and ranks 40 countries according to their attractiveness as infrastructure investment locations, and can be used to evaluate the potential opportunities and risks associated with each country.?

The index ranks countries on the following criteria: quality of existing infrastructure, economic environment, ease of doing business, political/social environment and availability of finance/financial environment. EC Harris primarily used data from the World Bank, the World Economic Forum and the Heritage Foundation as well as other global sources.

EC Harris used a four-quadrant matrix to determine the best places to invest:

1. Cash rich, asset poor (Qatar, Brazil and Russia)
   Where infrastructure is the enabler for new and growing economies to develop, these types of countries have historically been viewed as higher-risk countries to invest into. A good example is Qatar, which has a very high GDP per capita but assets are currently under development.
2. Cash poor, asset rich (Germany and the United Kingdom)
   These countries are typically suffering from aging infrastructure that needs replacing, but due to economic constraints, there are limited government funds available to do so. A good example is Greece, which has a poor economic outlook and limited government funding to help restore and invest into its current infrastructure.
3. Cash rich, asset rich (Singapore, Canada and China)
   There is much less risk involved when investing into countries that have good infrastructure, available cash flow and the outlook is deemed safe because of predictable income streams. A good example is Singapore; the current infrastructure is advanced, and the future economic outlook remains positive.
4. Cash poor, asset poor (India and Pakistan)
   Countries suffering from the burden of both poor infrastructure and poor economic outlook are often viewed as a higher-risk investment. A good example is Pakistan, where investing in current infrastructure would be viewed as a high risk, in part influenced by its poor economic outlook, but also by its low levels of government transparency and lack of investor protection within the legal system.

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Drew Campbell is senior editor of Institutional Investing in Infrastructure.

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Source: https://www.irei.com/blog/?p=364

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