The Australian Infrastructure Investment Report 2015 reveals a positive outlook for investment in Australian infrastructure but warns more should be done to maintain Australia’s position as an attractive investment destination.
Our report, developed in partnership with Infrastructure Partnerships Australia (IPA), captures the views of sophisticated global and domestic investors who collectively own or manage circa $A150 billion in infrastructure investments across the globe.
We undertook the research to better understand the appetite for investment in Australian infrastructure and to benchmark how Australia is viewed as an investment destination, compared to other parts of the world.Key findings at a glance
- Over the next 2-3 years, 79 per cent of respondents are highly likely to invest in Australia with a further 16 per cent considering it.
- Half of the respondents would consider investing in Australian projects over A$1 billion while 36 per cent would consider projects over A$2 billion.
- A shortage of investment opportunities in Australia is the key challenge identified by 42 per cent of respondents.
Our research shows Australia’s long track record in infrastructure and stable economic, fiscal and legal frameworks are the key drawcards for investment. Investors identify roads as the most attractive asset type, followed by water infrastructure and energy transmission. The overwhelming majority are seeking direct (rather than pooled) investments, citing the enhanced control over their assets.Politics dampens enthusiasm
Beyond the scale and number of investments, 68 per cent of investors cited political risk as the most significant risk to investment. Undoubtedly, this reflects recent events like the cancellation of Victoria’s East West Link and Queensland’s asset recycling programme, as well as ongoing debate about the ACT’s light rail project.Standing still is not an option
Our research confirms Australia’s reputation as a strong and established infrastructure market, but there are challenges for investors. Global competition for infrastructure investment funds is intensifying and Australia will have to overcome these challenges to remain competitive. Standing still will see Australia fall behind.