- Acceleration to infrastructure continues: 60% of investors plan to increase their infrastructure allocations despite the challenging economic environment
- Transition to green energy will drive growth: 56% want to increase renewables in their infrastructure portfolio and 45% plan to grow the share of alternative energy solutions such as biogas and hydrogen
- Cautious optimism on market developments: nearly half of investors expect an increase in infrastructure transactions and investment opportunities over the next 12 months
- Attractive income profile remains resilient: around a third of investors expect infrastructure income to improve this year, while 55% anticipate stable recurring income from infrastructure investments
Augsburg, 3 July 2023. PATRIZIA, a leading partner for global real assets, today released the infrastructure trends from its 3rd annual Client Survey, which is based on the views of over 120 respondents from its international institutional client base. The insights illustrate the continued expansion and attractiveness of real asset portfolios despite the challenging market conditions, with a strong focus on renewables and alternative energy solutions to drive this growth.
Graham Matthews, CEO Infrastructure at PATRIZIA, said: “Investors understand that the global megatrends of decarbonisation, digitalisation, urbanisation and demographic change make the long-term picture for infrastructure highly attractive. These megatrends underpin our global investment strategy at PATRIZIA and continue to drive the growth of our infrastructure platform, which now accounts for around 15% of PATRIZIA’s total AUM. While the market environment has clearly subdued client sentiment, our survey shows that strong appetite remains for scaling infrastructure portfolios with a focus on the energy transition, supporting the fundamental convictions we have for our flagship European and Asia-Pacific infrastructure strategies.”
The acceleration to real assets continues despite market headwinds
Sixty percent of investors said they plan to increase the share of infrastructure in their portfolios over the next five years, of which 11% plan a significant increase of more than 10%. While investor sentiment towards growing infrastructure allocations remains strong, a slight slowdown in the rate of growth (20% planning a significant increase in 2022) reflects the more tentative outlook on the current market environment.
However, investors still view market developments in infrastructure with cautious optimism, with nearly half of investors expecting a pick-up in transactions and investment opportunities over the next 12 months. Fifty five percent also anticipate recurring income from their investments to remain stable, with around a third of investors expecting recurring income to increase. Likewise, approximately 70% of investors forecast valuations to either stay the same or increase this year.
Strong conviction for investments addressing the global megatrends
According to the survey, investors have a clear preference for allocating to the sectors that address the global megatrends, with a particular focus on decarbonisation. Fifty six percent said they plan to increase their investments in renewable energy, such as solar and wind farms, over the next five years, while 45% expect to increase their allocation to the energy transformation and alternative energy solutions, such as biogas and hydrogen. Likewise, nearly 40% plan to decrease their exposure to traditional energy sources, such as nuclear, coal and gas.
There is also positive investor sentiment towards digital infrastructure, with around 35% planning to grow their exposure to telecommunication infrastructure and fibre, as well as social infrastructure where nearly a quarter plan to increase allocations.
“As our survey indicates, investors have a clear view on futureproofing their investments by increasing their allocations to key transformational sectors like the energy transition, digital infrastructure and social infrastructure. With our thematic and thoughtful approach to investing, we are able to fully support our clients with constructing portfolios that have suitable exposure to all of these sectors, which will ultimately shape how we live in the future and enable smarter, cleaner and better-connected communities across the globe. From a strategic perspective, our clients recognise the attractiveness of the mid-market segment, aligning with our own belief that mid-market deals offer unique opportunities to drive investment performance,” adds Graham.
The survey indicates that investors expect the lower mid-market segment, that is equity investments less than EUR 250 million, to be the sector that will most likely outperform the broader infrastructure market over the next five years, with 16% of investors anticipating higher returns here. This view is in line with PATRIZIA research that has found that mid-market strategies significantly outperform their large cap peers as they benefit from a higher deal supply in a less efficient market, source more from independent companies without prior private ownership, and provide diversification benefits to a portfolio.
PATRIZIA: A leading partner for global real assets
With operations around the world, PATRIZIA has been offering investment opportunities in real estate and infrastructure assets for institutional, semi-professional and private investors for 39 years. PATRIZIA manages more than EUR 58 billion in assets and employs over 1,000 professionals at 28 locations worldwide. PATRIZIA is making an impact since 1984 by helping children in need, since 1992 in close collaboration with Bunter Kreis (“colourful circle”) in Germany for aftercare of children with severe diseases and since 1999 through its support for the PATRIZIA Foundation. The PATRIZIA Foundation has helped around 280,000 children in need worldwide gain access to education and thus, has given them the chance of a better life over the last 24 years. You can find further information at www.patrizia.ag
Phone: +44 7881 276427
 The online survey was conducted form March – May among PATRIZIA’s international institutional client base and had 122 respondents.