Infrastructure investment needs to be a real asset class

THE infrastructure sector faces major challenges. These include insufficient investment, partly due to fiscal consolidation, as well as shortcomings caused by poor project selection and planning, inefficient delivery, and persistent emphasis on building new capacity rather than using existing assets optimally.

Among the market inefficiencies are a lack of suitable project pipelines, inadequate risk-adjusted returns, prudential and regulatory constraints and high development and transaction costs.

To increase long-term investors' asset allocations, infrastructure needs to be transformed from the realm of an "alternative" investment category into a real asset class. This would then attract new streams of investment from around the world.