RICS report highlights unspent infrastructure capital of over $200bn
27 July 2020
A report, co-authored by Dr Stanimira Milcheva for the Royal Institution of Chartered Surveyors RICS called “Bridging the Gap: Private investment in future infrastructure provision” has been published.
The report considers the nature and extent of barriers inhibiting private investment into infrastructure projects. The report shows that despite a maturing infrastructure investment market, private capital sufficient to support $1trn of infrastructure development is currently going unspent.
The report makes a number of recommendations to unlock greater infrastructure spending globally. It makes practical, market-facing recommendations on how infrastructure development plans and pipelines can be converted into investable projects.
The key takeaways are:
- $220bn of capital in infrastructure funds has yet to be deployed, and $200bn extra is being raised by investment funds; enough to support the development of $1 trillion worth of infrastructure projects globally
- Unlocking this private capital will be crucial to funding level of infrastructure required in post-COVID-19 economic recovery
- However, investment has been constrained by lack of investment opportunities, as governments fail to match delivery of high impact greenfield projects with growing investor demand
Dr Milcheva, who is an associate professor in Economics and Finance of Real Estate says:
“Our research on private equity infrastructure funds shows a large amount of dry powder – or funds that are not deployed in projects – with funds mostly overshooting their target values. There is certainly enough capital to be deployed however what the interviews conducted for the RICS report reveal is the lack of investible projects, especially greenfield ones. Policy makers should work hand in hand with funders to structure infrastructure deals to match the desired risk-return profiles of investors.”