The Australian infrastructure sector is losing its lustre as an investment destination for international capital according to the latest index of global markets appeal.
The latest bi-annual Global Infrastructure Investment Index released by design and consulting firm Arcadis indicates that Australia has fallen two places to 11th position when it comes to the attractiveness to international investors of infrastructure undertakings.
According to Gareth Robbins, Arcadis’ Director of Built Asset Consultancy – Australia Pacific, uncertainty surrounding the commitment of local government to infrastructure projects is the chief reason for Australia’s fall in the rankings.
“In many states we are seeing infrastructure projects treated as political handballs and often not completed, which is reducing investor confidence in a government’s ability to see a project through and deliver a ‘bankable’ investment,” said Robbins.
“Coupled with the economic turbulence of the last two years it’s not a surprise to see Australia fall two positions in terms of investment attractiveness.”
The top placeholders on the 2016 Global Infrastructure Investment Index would indicate that political and regulatory stability are key factors for shoring up the appeal of a given jurisdiction as infrastructure investment destination.
In first place came the ASEAN city-state of Singapore, which also held the top spot in the 2014 list.
Anglosphere countries figure prominently, with Canada in fourth position, and the USA and UK taking the eighth and ninth spots respectively.
Other regions considered a strong draw for infrastructure investors include the smaller oil-rich states of Arabian Peninsula, with Qatar and UAE occupying second and third place respectively, as well as Scandinavia, with Norway and Sweden in sixth and seventh position.
While Australia may have dropped off the top ten list, Robbins notes that the nation’s infrastructure still presents highly appealing opportunities to overseas investors, particularly given the importance of private financing to domestic infrastructure development.
“Australia has a tried and tested history of private investment which has contributed to our 11th position in the ranking,” said Robbins. “We have bright spots, for example New South Wales, which is outperforming the rest of the nation, and we are seeing continued investment appetite out of Asia, Canada and the Middle East.
“For investors, the local market is presenting opportunities through asset recycling initiatives, and is still offering solid long-term infrastructure investments.”