Infrastructure & Logistics
Infrastructure
The scale of global infrastructure investment demand is immense, is forecast to reach US$94 trillion by 2040. There is an increasing need to replace and expand international infrastructures such as airports, highways, railways, and ports. Additionally, an expansion of the energy supply chain and connecting new developing regions to the national grid is an urgent matter. To meet this investment need, the world will need to increase the proportion of GDP it dedicates to infrastructure to 3.5%, compared to the 3% expected under current trends. This tremendous investment gap has created the opportunity for private capital to lead the necessary investments in the sector.
Under the current trend scenario, 59% of the estimated global infrastructure spending needs relate to Asia. A further 17% relate to the Americans, and 16% to Europe, while in Europe the gap between the current trend and the investment need (US$14.8 tln) stands at circa US$2tln or US$590 bn per year.
In Europe, under the current investment scenario, circa US$7tln will be invested in electricity and roads. The largest investment gap exists in ports (62%), followed by railways, roads, and airports (20%), while in the water and telecoms sectors, the gap is small.
Logistics
The global logistics market size reached a value of US$ 4.963 tln in 2019. The logistics market is primarily driven by the growth in the e-commerce industry. This can be attributed to a significant increase in the sales of goods through online retail channels such as Amazon, eBay, and Alibaba. The fundamentals of this sector position it as one of the most resilient through this economic downturn, as investors look to review their asset allocations in favor of the sector.
The logistics market in Europe is poised to grow by US$218 bn during 2020-2024, progressing at a CAGR of 3% during the forecast period. The European market is driven by strong demand for e-commerce and an increasing number of M&A deals.
In Europe, the logistics sector accounted for 11% of the overall investment turnover during H1 2020, still in line with the five-year average. The reason for that is the inability of the availability of stock to keep pace with investors’ insatiable demand, constraining investment volumes in the sector.