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Bridging Continents - Infrastructure Index 2019

Bridging Continents

The CMS Infrastructure Index analyses data across 50 jurisdictions against six criteria to create a guide to the most attractive destinations for infrastructure investment.

In Bridging Continents, the 2019 CMS Infrastructure Index, we see that infrastructure is connecting people worldwide at an unprecedented pace. Developing economies are investing heavily in roads, rail and airports to drive economic growth and bring them closer to international trading partners and the rollout of 5G and building of smart cities are creating new digital highways. 

Germany has taken top spot.  Germany’s focus on sustainability and innovation is the driving force behind its position. The country is aiming to make climate action part of the German national identity and supporting this through a number of offshore wind projects, construction of a fourth electricity highway and an extensive EV charging programme. 

The UK’s story is not so positive.  We see the UK fall from fourth in 2017 to ninth in 2019.  The Brexit-effect.  There is a steady pipeline in some infrastructure sectors, for example rolling stock renewals in England and transport in Scotland.  There is also a shift from primary to secondary investments. However, unsurprisingly the political uncertainty has led to delays on flagship projects (e.g. HS2 and Heathrow airport) and a decrease in lending to UK projects. 

Another country to note is China, which has risen by 10 points since the 2017 index and is now in 18th position.  5G is instrumental in China’s increased ranking, due in part to major corporations such as Huawei and ZTE ; over 10 million advance orders for 5G data plans were submitted to China’s three mobile operators, and they will deploy a total of 130,000 standalone 5G base stations across the country by the end of 2019. 

As the world focuses on climate change and sustainability, we see this transferring to the infrastructure sector too.  Infrastructure assets have a vital role in climate change mitigation and economic, social and governance (ESG) criteria are an increasingly popular way for investors to evaluate companies in which they might want to invest.  However, the sector is facing a number of challenges, including lack of governance, an absence of objective standards and as a result, no regulations on how to report and measure performance.  Regulators globally are working to create their own regulations in this area but with each country creating its own standards, international operators will face a complex matrix of requirements for different projects around the world. 

In this year’s report, we see some very strong representation from the Americas. Latin America has some mega interconnectivity projects, presenting some exciting developments.  Examples include a 3,500km-long submarine fibre optic network from the north to the south of Chile and the recently completed 10,000km subsea cable connecting California to Chile.  On the other side of the continent, Brazil is working on the innovative 9,300km EllaLink subsea cable system bridging between the American (Brazil) and European continents (Portugal and Spain).

Overall, the infrastructure sector presents a positive picture in an uncertain world.  Governments globally are investing heavily in infrastructure assets to stimulate their economies.  On the flip side, there is supply of capital as investors look for long-term investments.
 

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Bridging Continents - Infrastructure Thought Leadership Index 2019
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Kristy Duane
Kristy Duane
Partner
Co-head of Infrastructure and Project Finance
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Paul Smith
Partner
Head of the CMS Energy, Projects and Construction Group and Co-head of Infrastructure & Projects Group.