The Global Infrastructure Investment Index: Where to spend your money

The recently released third Global Infrastructure Investment Index has seen Australia fall out of the top 10 for investment attractiveness. But what does this mean for investors? Where should you spend your money? Gareth Robbins, Director - Built Asset Consultancy, discusses.

An aerial view of a highway

"If infrastructure needs money, and money needs good investment , where can the two best match?" Gareth Robbins, Director - Built Asset Consultancy.

I’ve been lucky enough to work and travel around much of the world. I’m yet to meet anyone who complains that their roads are too smooth and empty, the trains too frequent and reliable, the electricity supply too consistent or the water supply too pure.

Australians are no different, and the need for ongoing improvements, in transportation in particular, frequently dominate the headlines, so finding the money to deliver those improvements is vital.

Thankfully, there are many pension funds, investment banks and sovereign wealth funds keen to find stable, reliable long-term investments of the kind that infrastructure can bring.

The challenge is that in the modern world money can flow easily to where in the globe the best returns can be achieved with the lowest risks, so understanding the relative merits of different countries is vital for funds, and creating the right environment for investment is vital for countries.

Australia hasn’t been doing so well at that lately. A reliance on commodities and the recent currency falls that resulted from that, plus political games over whether big infrastructure schemes will or won’t go ahead, have caused it to drop down the Arcadis Global Infrastructure Investment Index this year.

The third index assesses the relative attractiveness of different countries for investment in infrastructure, across a wide array of economic, business, risk, infrastructure and financial measures. The resulting rankings, with Singapore coming out on top, and the USA charging up as Australia drops down, reflect factors such as the historical impact of recent growth and currency swings, the underlying stability and transparency of markets, and relative political stability.

The picture is never straightforward, with big variations even within countries such as Australia and the USA where state governments, and their relative stability, economic success, planning horizons and attitude to private investment can differ greatly. If this was a cities index rather than a country index I’d expect Sydney to be well ahead of other Australian cities at the moment for example, and as a place to invest if it stood alone it may well be up there with Singapore. 

But it’s a country index, and overall Australia has dropped out of the top-10, as other countries get their act together faster and more consistently around the way they plan and raise funds for major infrastructure. There’s still plenty of interest in investing in Australia, as recent asset sales have shown, but in a world of global competition, reliability, stability and long-term vision are vital if Australia’s infrastructure is going to keep pace with the needs and expectations of its people.  

Gareth Robbins

Sector Managing Director - Property, Energy and Resources Ask me a question
Share on Wechat
"Scan QR Code" on WeChat and click ··· to share.