Global Design & Consultancy firm for natural and built assets,Arcadis, has released its
Global Infrastructure Investment Index which reveals Australia has dropped two places on the international scale. Released every two years, the index measures which global markets are attractive for infrastructure investment relative to other regions globally.
Australia’s drop in rank presents a serious issue according to Arcadis’ Director of Built Asset Consultancy - Australia Pacific, Gareth Robbins, as public infrastructure funding dries up, Australia will become reliant on private investment meaning projects need to be attractive to investors.
“In many states we are seeing infrastructure projects treated as political handballs and often not completed, which is reducing investor confidence in a government’s ability to see a project through and deliver a ‘bankable’ investment. Coupled with the economic turbulence of the last two years it’s not a surprise to see Australia fall two positions in terms of investment attractiveness,” said Mr Robbins.
“However, Australia has a tried and tested history of private investment which has contributed to our 11th position in the ranking. We have bright spots, for example New South Wales which is outperforming the rest of the nation, and we are seeing continued investment appetite out of Asia, Canada and the Middle East.”
The 2016 Global Infrastructure Investment Index found that nations with stable political environments, secure business environments and strong growth potential such as Singapore, Qatar and Canada are the most attractive markets for infrastructure investors according to Arcadis.
“The belief that devaluation has reached its bottom and commodity prices are beginning to recover makes it a good time for investment in infrastructure. Leading cities such as Sydney and Melbourne are setting out their infrastructure investment priorities and privatising assets to finance new investment.
“For investors, the local market is presenting opportunities through asset recycling initiatives, and is still offering solid long-term infrastructure investments. The key is working with the right local partners who have the depth of knowledge and can advise on potential of an asset,” said Mr Robbins.
Despite infrastructure being a long term investment, Arcadis’ third Global Infrastructure Investment Index also highlighted that short term factors such as currency devaluations, commodity prices and security issues can be a barrier to investment.
Given these issues, nations including the US, UK and Germany are in strong positions to potentially attract more private sector finance which could bridge the funding gap for the development of much needed new infrastructure. According to the World Economic Forum this global investment funding gap stands at
US$1trillion per year.
The most attractive countries for infrastructure investment in 2016 are: