This white paper delves into the transformative potential of infrastructure investments in addressing critical global challenges, including climate change, urbanisation, and technological advancements.
Infrastructure is a resilient and indispensable asset class, particularly in times of uncertainty, inflation, and market volatility. With an estimated USD 94 trillion in investment required by 2040 to meet global infrastructure demands, the sector presents unparalleled opportunities for investors.
Private infrastructure has consistently put in robust performances, achieving an annualised return of 9.7% since 2015. This performance is accompanied by significantly lower volatility compared with global equities, making it a reliable investment choice. Its resilience has been evident through various economic crises, including inflationary pressures, geopolitical tensions, and health emergencies. Notably, in 2024, private infrastructure emerged as the top-performing asset class, further solidifying its appeal as a dependable and strategic investment option.
Several key sectors are driving the momentum in infrastructure investments, including renewable energy, digitalisation, electrification, and circular economies. Renewable energy, bolstered by technological advancements and economies of scale, is poised to dominate future power generation. Investments in energy transition initiatives, such as modernising power grids and developing energy storage solutions, are pivotal to achieving global decarbonisation goals.
Digitalisation represents another transformative trend, with global data demand projected to increase tenfold between 2020 and 2030. This surge is fuelling the need for data centres, high-speed connectivity, and smarter infrastructure solutions that enhance both operational efficiency and sustainability.
The global transport infrastructure is also undergoing significant modernisation, with investments expected to reach USD 36 trillion by 2040. Key priorities in this sector include decarbonisation, digitalisation, and climate adaptation. Initiatives such as the adoption of sustainable aviation fuels and the expansion of rail freight networks are also critical to reducing emissions and enhancing sustainability.
The circular economy offers additional opportunities, with the potential to generate USD 4.5 trillion in economic growth by 2030. Investments in waste management, water treatment, and recycling are essential to addressing resource inefficiencies and promoting sustainability.
Despite these promising opportunities, a funding gap of USD 15 trillion is anticipated by 2040, underscoring the need for robust private sector participation. By aligning with global megatrends and adopting a strategic, diversified approach, investors can play a pivotal role in shaping a greener, more resilient global economy. Infrastructure investments not only offer financial returns but also contribute to addressing some of the most pressing challenges of our time, making them a cornerstone of sustainable development.
The views and opinions expressed by fund managers (internal or external) may differ from the house view. They are shared for informational purposes and do not constitute investment advice or a recommendation.
