Arcadis : Global Infrastructure Investment Index 2016

MiziolekarcadisJaroslaw Miziołek – Director of Infrastructure (Poland) – Arcadis

Singapore remains most attractive country for investment in infrastructure, according to the latest report Arcadis.

  • Long-term political stability and economic is essential for the investment in infrastructure
  • United Kingdom, Germany and the Netherlands recorded an increase in rankings
  • Brazil, Saudi Arabia and Australia are among the countries that recorded a decrease
  • Poland promoted the 30th to 29th position

Countries characterized by a stable political situation, a secure business environment and high growth potential, such as Singapore, Qatar and Canada, are the most attractive markets for investment in infrastructure, according to Arcadis, a leading global firm of design and consulting.

Investments in infrastructure are long-term projects, but the third edition of the report Arcadis Global Infrastructure Investment Index indicates that short-term economic growth factors, including the devaluation of the currency, commodity prices and security issues, may prove to be obstacles to investment planning. Given these issues, countries such as the United States, Britain and Germany stand in a winning position in attracting potential investments from the private sector, which can meet the demand for new infrastructure.

Ten countries most attractive for long-term investments in 2016 are:

Position Country Position change
(2014)
1 Singapore =
2 USA =
3 UAE =
4 Canada =
5 Malaysia +2
6 Norway =
7 Sweden -2
8 United States =
9 Great Britain +1
10 Netherlands +1
… 29 Poland +1

Don Hardy, Global Leader of Advisory Services for Infrastructure Arcadis says:

“All over the world there is a huge public demand for new infrastructure. There are many ideas and plans, but the basic problem is the lack of funds for their implementation. You should find a way to raise the level of investment readiness of these plans. “

Matthew Cutts, Global Sector Leader of Financial Institutions Arcadis adds:

“Infrastructure is becoming popular target of investment for private investors, especially now, in times of risk and uncertainty. Revenue streams are relatively stable, and this situation should be maintained for the next 30 years, or a period, which is the most popular among investors. Short-term factors, such as the new government and the devaluation of money, they can also create investment opportunities, however, these events must be considered in the context of a longer period. “

Singapore maintained its first position as the most attractive market in the world, achieving high performance in terms of business, the risk level of the existing infrastructure and the financial sector.

Despite a slightly lower assessment of the economic factors, the economy still has a strong position in the region. So far, most of the projects were financed traditionally by public funds, but the Singapore authorities are increasingly seeking the involvement of private investors.

In Asia, the rise recorded Malaysia and Japan, respectively, on the 5th and 12th position. China has also achieved high scores in most categories, but slightly less attractiveness of the business sector and a higher level of risk meant that the Middle Kingdom has invested in the middle of the pack in 17th place.

United States moved from 11th in 2012 to 8th in this year’s ranking, which is reflected in the increased interest from investors. This increase is due to the dominant economic position, low level of risk and strong financial sector. In the transport sector, there is a big gap in the financing of investments in connection with the individual states seek to bring private investment and create risk models that are more attractive to investors.

European countries are among the most stable, mature and attractive investment markets, with up to 8 representatives among the top twenty rankings. A strong deal flow and years of experience with the system of public-private partnerships make these markets are characterized by a low level of investment risk, as exemplified by the Nordic countries, the Netherlands, Germany and France. Among the most attractive markets is the United Kingdom, which moved up from 13th position in 2012 to 9th in 2016.

Poland recorded a minimum increase of 30 on the 29th position. compared to 2014. Low-evaluated the economic factors and the freedom of business activity, while high scores awarded Poland a low level of risk, and access to finance.

Despite the high ranking of attractiveness for investment in infrastructure opportunities in the Middle East have so far limited. However, the falling export earnings impose increased pressure on the planning of future spending. Qatar and the United Arab Emirates has traditionally financed infrastructure development with public money, but recent changes in legislation in Dubai show that the UAE opens on funding from private sources.

Qatar has achieved high results in the category of GDP, the business environment and the financial sector, also has extensive plans for investment in infrastructure. Saudi Arabia has dropped three places to 15th position as a result of reducing the size and dynamics of the market, as well as by the relatively low ratings for the infrastructure.

Australia fell from 9th to 11th position due to lower results in terms of the level of business risk and ease of doing business. However, looking at the immediate future, in this country opens up many possibilities.

Devaluation has probably reached its lowest level, and commodity prices are starting to grow back, which makes it a good time to invest in public infrastructure. The largest cities such as Sydney and Melbourne, are in the process of determining priorities for investment in infrastructure and privatizing their assets to finance new ventures.

A number of Latin American countries recorded a drop in the ranking because of poor economic performance, political instability and high risk business. However, since taking power by the new government in Argentina at the end of 2015 years there is a chance to improve the position of this country in the future.

Short-term risks may be barriers for project financing

This year’s report found the impact of short-term factors such as the devaluation of the currency, commodity prices and political instability, to finance projects. The report also shows that four of the ten most attractive for investment countries – the UAE, Canada, Malaysia and Norway – have higher business risk in the short term, and therefore more favorable than the construction of new infrastructure may be activities related to operation and maintenance of the existing one.

Global Infrastructure Investment Index is a report published every two years, which ranks 41 countries in terms of their attractiveness for investment in infrastructure. In order to measure the attractiveness been analyzed a range of 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 funding sources. The combination of all these factors gave an overall picture of the risk profile and the attractiveness of the market for potential investors.

Sources: World Bank, Global Competition Report of the World Economic Forum, the Heritage Foundation, DHL, Economic Intelligence Unit, Business Monitor Index (BMI), Political Terror Scale (PTS)