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CMS Infrastructure Index – guide to global investment hot spots

Annual Review 2017-2018

June 2018

Creating an attractive environment for investors in infrastructure is no easy task. Politics and policy can make or break private participation and the flow of investment – something that has never been clearer than in this year’s CMS Infrastructure Index. The Index ranks 40 jurisdictions in order of infrastructure investment attractiveness.

The Netherlands has secured top spot in this year’s Index despite the uncertainty of having 208 days with no government. A vigorous economy and a transparent and efficient procurement process, together with a multibillion-euro pipeline of road and water public-private partnerships (PPPs), have created an attractive, highly competitive environment for investors.

The creation of a more varied pipeline to complement the politically appealing mega-projects has been key to success in the Netherlands. Additionally, governments have a large part to play. Wim Blaasse, of Dutch infrastructure fund DIF, said, “The Dutch government has a consistent policy when it comes to PPPs, as all projects that reach a certain criterion are simply procured as PPPs. It provides certainty, which in turn creates a large pipeline, which means companies can build up large teams in the country.”

It is a different story for the UK. Ranked fourth after the Netherlands, Canada and Germany, Brexit and political uncertainty are having a considerable impact on the pipeline of projects. The National Infrastructure Commission warns of significant challenges unless there is stronger, strategic planning around infrastructure. Despite this, investors still consider the UK to be a strong market.

Plenty of capital continues to head towards Europe as the continent bounces back after years of stagnation. CEE is particularly exciting as their economies experience a significant expansion due to the favourable environment for foreign investment and EU financing.

Canada is reaping the benefits of its government’s focus on infrastructure and ranks second in the Index. The infrastructure demands in many of Asia-Pacific’s developing nations, meanwhile, are rapidly being filled by the promise of China’s Belt and Road Initiative and deep pockets.

The Middle East is continuing to diversify away from oil and take advantage of its natural solar resources. The region also has solid plans around transport, water and sewerage, offering some prime opportunities for investors.

In addition, as traditional infrastructure asset classes become more competitive, investors are increasingly looking to alternatives. Examples such as 4G and fibre optic networks are creating a platform for smart cities and the Internet of Things. We are also seeing investment outside of traditional PPPs such as student accommodation, car parks, energy smart meters and rolling stock.

Overall, the CMS Infrastructure Index and its five regional supplements present a positive view of the sector globally. A large project pipeline worldwide, new markets embracing PPPs and alternative asset classes will deliver considerable benefits. With large amounts of private sector capital waiting to be invested, governments should be looking at how they can capitalise on these developments.

For further information and to download our reports please see: cms.law/infrastructureindex

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