Unlike the short-term fluctuations of the macroeconomic environment, infrastructure allows investors to focus on deep structural forces shaping economies over decades.

To further highlight the long-term perspective that infrastructure investment offers, look no further than the Massachusetts (MA) Bay Transportation Authority (MBTA) subway located in Boston, MA. Colloquially known simply as “the T,” this subway system was designed over 130 years ago. The foresight of those early planners continues to benefit commuters today despite the current system's strains due to underinvestment [1][2]. This example underscores the enduring impact of infrastructure investments and the need for continuous funding to maintain and upgrade these critical assets.

Emerging opportunities (and challenges)

We believe the infrastructure sector is ripe with opportunities, particularly in the context of recent economic shifts. The repricing of risk due to recent economic events – such as the pandemic and inflationary pressures – presents a unique opportunity for investors to lock in higher returns over the long term.

The evolving nature of infrastructure investments

Traditional assets, such as roads, airports, and marine ports, remain essential, but new opportunities are emerging beyond concrete and steel in artificial intelligence (AI) and energy transition. AI, for instance, requires substantial energy infrastructure to support data centres and high-performance computing. The demand for energy to power these technologies is expected to grow significantly, presenting a lucrative investment opportunity.

Current themes and trends

Several key trends are shaping the infrastructure investment landscape. Digitalization, urbanization, and decarbonization are at the forefront of these trends.

Digitalisation

The rise of AI and the increasing reliance on data centres are driving demand for robust energy infrastructure. Data centres currently consume about 3–4% of US energy, a figure expected to rise to 10–12% by the end of the decade [8]. This surge in energy demand underscores the need for substantial investments in power generation and distribution infrastructure.

Urbanisation

As populations continue to migrate to urban centres, the demand for infrastructure in these areas is growing. This includes transportation systems and essential services like schools, hospitals, and clean water facilities. The trend towards urbanization is particularly pronounced in emerging markets (EMs), where rapid population growth is driving the need for extensive infrastructure development.

Decarbonisation

The transition to green energy is a critical component of future infrastructure investments. The Inflation Reduction Act has set the stage for significant investments in renewable energy despite potential policy changes under new administrations.[9]. Renewable energy sources, such as wind and solar, are becoming increasingly cost-competitive with traditional fossil fuels, making them a pivotal part of the energy mix.

The role of public-private partnerships

Public-private partnerships (PPPs) are essential for addressing the infrastructure investment gap. Governments alone cannot meet the enormous funding requirements, especially given the strain on public finances from recent economic crises. PPPs leverage private sector expertise and capital to deliver infrastructure projects efficiently.

The importance of government support

Countries like the US, with its state-by-state approach, and EMs like Mexico and Chile actively use PPPs to drive infrastructure development. These partnerships are crucial for projects ranging from managed lanes in Georgia to fiber networks in Spain.

Investment strategies and portfolio integration

Infrastructure investments offer several benefits, including inflation protection, high barriers to entry, and long-term, predictable returns. These characteristics make infrastructure valuable to investment portfolios, providing potential diversification and stability.

A diversified approach to infrastructure investing

Both private and listed infrastructure assets each offer unique advantages. Private infrastructure investments provide direct exposure to long-term projects with government backing, while listed infrastructure offers liquidity and the potential for attractive valuations.