Transport infrastructure assets back in demand by investors

Investors’ appetite for infrastructure assets waned during the pandemic but is coming back strongly, experts agreed at Real Asset Media’s Infrastructure Summit: Transport & Logistics, which took place online yesterday on the REALX.Global platform.

Tania Tsoneva.

“There was a significant dip in investment flows in transport infrastructure because of Covid-19, but it’s a cyclical play and we are seeing more volume as the economic recovery takes hold,” said Tania Tsoneva, senior director, global infrastructure research, CBRE Investment Management.

The recovery is providing momentum and governments’ ‘build back better’ drives have highlighted the need for significant investments in the sector.

“The volume of transport infrastructure transactions has been good recently,” said David Pedler, director transaction services, PwC. “Awareness of the infrastructure gap has led to positive initiatives and extra impetus to invest. The appetite remains very strong and we’ve seen significant deals across all segments.”

The impact of the pandemic varied greatly depending on the segment, with some barely affected while others were severely hit and continue to suffer.

“Some pockets of transport infrastructure were not impacted by the pandemic at all, like ports,” said Tsoneva.

Investors still have confidence in the right infrastructure assets but stay away from sectors they see as problematic.

“There’s been more transaction activity in shipping and rail and there have been some big deals in toll roads,” said Pedler. “The highest level of hesitancy is in the aviation sector because despite the expectations of a rebound it has not gone back to pre-Covid levels.”

‘Uncertainty’ distinguishes latest crisis from previous examples

The pandemic is just the latest in a series of events that have affected aviation, from the GFC to the volcanic ash cloud. The sector always bounces back, but this time investors are likely to remain cautious because the outlook is uncertain.

Even within aviation, however, there are distinctions to be made.

“Anything that has a cross-border aspect is problematic and international travel will remain impacted by restrictions for a while yet,” said Tsoneva. “But in countries with strong domestic travel even aviation is recovering.”

Now that most countries are recovering from the pandemic and the economic crisis, investments are set to pick up.

“Demand for investment remains high and as the recovery takes hold in Europe we expect many more transactions and a robust market going forward,” said Pedler. “There are huge opportunities in electric vehicles and in decarbonising the transport infrastructure.”