Emerging markets are winning the race to attract global infrastructure investment
- Singapore, Qatar & UAE top the ARCADIS Global Infrastructure Investment Index ranking
- UK, USA are moving up the index, but need to take urgent action to
attract greater funding to replace their aging infrastructure
- Emerging markets including Philippines and Indonesia are rising up the index
Singapore is the most attractive market in the world for
infrastructure investment, according to ARCADIS, the leading global
natural and built asset design and consultancy firm. Qatar and UAE
completed the top three with their strong business environments, healthy
pipelines of development work and growing economies, making them
attractive to investors, including pension funds and banks.
The findings come from the second
ARCADIS Global Infrastructure Investment Index which
ranks 41 countries by their attractiveness to investors in
infrastructure. In order to gauge their appeal the study looked at
various issues including the ease of doing business in each market, tax
rates, GDP per capita, government policy, the quality of the existing
infrastructure and the availability of debt finance. Combining all of
these factors provided a strong overview of the risk profile for each
market and how attractive each one is likely to be to potential
investors.
Rob Mooren, Global Director of Infrastructure at ARCADIS said:
“Good infrastructure is important for the long term economic
development of a country. Many governments are struggling to finance
infrastructure investments. As traditional debt markets are now harder
to access, governments need to find alternative finance and agree to
progressing projects. By encouraging private finance into
infrastructure, governments can remain globally competitive and meet
their social and economic objectives.”
The GIII 2014 ranks the following as the top ten most attractive
countries for infrastructure investment in 2014. The difference from
their 2012 ranking is in brackets:
| 1. |
Singapore |
(=) |
| 2. |
Qatar |
(=) |
| 3. |
UAE |
(+1) |
| 4. |
Canada |
(-1) |
| 5. |
Sweden |
(=) |
| 6. |
Norway |
(=) |
| 7. |
Malaysia |
(=) |
| 8. |
USA |
(+3) |
| 9. |
Australia |
(-1) |
| 10. |
UK |
(+3) |
Singapore attractive, but better investment opportunities may lie elsewhere
Singapore’s integrated strategic plan linking infrastructure planning
with business and social requirements helped it to retain its top
position in the index. However, the government self-finances most major
projects so investment opportunities are limited. Therefore other
countries with major investment plans such as Qatar and the UAE, and
emerging Asian markets such as Malaysia and the Philippines are
considered more promising for investors.
USA and UK enter top ten, but must deliver against pipeline promise
The USA and the UK entered the top 10 for the first time through
improvements in their economies as well as the growing need for
investment in infrastructure. However, both countries must work hard to
attract private investment funds, as they compete against countries
that provide more clarity on government infrastructure policy and are
able to act on their promises to delivery major projects.
Continental European countries struggling to attract finance
Continental European countries present a mixed picture in their
attractiveness to investors. At the top of the Continental European
table, low risk markets like Sweden and Norway remain stable at fifth
and sixth. Both have highly efficient business environments with
transparency in regulation and efficient legal systems. Continental
European countries such as Holland, France and Italy are either lacking
public finance needed to upgrade their ageing infrastructure or have a
lack of commitment from their governments to deliver proposed projects.
They have therefore slipped down the rankings.
Latin America countries vary in attractiveness
Chile is the highest placed Latin America country at 13th position, but
its potential is limited by its size. In 2013 its construction market
was estimated to be worth US$41.8billion but this is highly concentrated
in mining. Brazil is placed nearer the bottom of the ranking in 32nd
place, indicating that some of the difficulties experienced with delayed
programs have the potential to be risky for investors.
Rob Mooren continued: “A key difference that we have
seen in the Asian and Middle Eastern markets is that those countries
that have a clear integrated strategy tying infrastructure development
plans to business and economic objectives have higher rankings. This
gives long term clarity to investors and is something that developed
markets would do well to copy if they are to succeed in attracting more
private finance into infrastructure.”
The report also explored the factors that governments, infrastructure
owners and operators need to consider in order to attract private
finance. It suggested the structuring of infrastructure projects is key
to this. For example, in project finance, mature markets like Canada,
Australia, the US and the UK have sponsors that understand the pricing
of assets, are aware of the rates of return expected and appreciate the
key risks involved, making it easier to attract infrastructure
investment. These markets have experienced the early challenges of
introducing PPP and PFI and have learned what to expect from both an
investor and political perspective
Rob Mooren concluded: “Markets that have created the
right political environment committed to infrastructure development, can
demonstrate the economic conditions required to sustain long term
growth. They have attractively structured infrastructure schemes which
will stay ahead of the competition when it comes to attracting the pool
of international investors who are increasingly considering this asset
class.”
.
The full report can be
downloaded here |
View infographic here: |
 |
 |
- Andy Rowlands, Head of Corporate Communications at ARCADIS
M'sia second in Asia for infrastructure investment
Malaysia has been ranked second in the Asian region in terms of being an attractive market for investment in infrastructure, according to Arcadis.
The leading global natural and built asset design and consultancy firm said Malaysia scores highly across the investment criteria, placing it ahead of other large regional economies like Japan, China and South Korea.
Globally, Malaysia is placed at the 7th position, ahead of the US, Australia and United Kingdom.
The findings come from the second Global Infrastructure Investment Index, where it looked at various factors including the ease of doing business in each market, tax rates, GDP per-capita, government policy, quality of existing infrastructure and the availability of debt finance.
Arcadis Head of Infrastructure for Asia Richard Warburton said that infrastructure is the backbone of a country and a catalyst for its long-term economic development.
With Malaysia's average annual population growth rate of 1.4%, he said, investment in new infrastructure will be imperative.
"Combined with Malaysia's goal of a high-income status by 2020, plans are already underway for specific cities and urban clusters under Greater Kuala Lumpur/Klang Valley to be developed into vibrant, productive and liveable cities that are comparable to other major cities in the world.
The top 10 most attractive countries in Asia Pacific for infrastructure investment this year are Singapore, Malaysia, Australia, Japan, China, Thailand, South Korea, Indonesia, India and Philippine.
Warburton said countries that have created the right political environment for sustained long-term economic growth and have attractively structured infrastructure schemes will stay ahead of the competition to attract international inventions.
Sources: TheSundaily/BERNAMA/PropertyGuru
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