The world's best markets for infrastructure investment have been revealed.
Releasing its Second Global Infrastructure Investment Index 2014, engineering consultancy Arcadis says Singapore retained its position at the top of the list, followed by Qatar. The United Arab Emirates has overtaken Canada to make the top three, the US and UK have entered the top 10 and developing markets in Asia and Latin America moved up the rankings.
With the highest built asset wealth index of any nation on earth, Singapore – which only last month was ranked second behind Hong Kong in the World Bank’s Global Competitiveness Report – is one of the few places in the world with a genuinely integrated strategic plan linking infrastructure planning with business and social requirements, Arcadis says.
Moreover, with the city/state expected to add an extra 1.5 million to its population by 2030, the nation is ramping up its capacity building efforts and is looking to double the length of the Singapore Mass Rapid Transit System, build new airport terminals and a third runway, and double container capacity, as well as freeing up prime development land through relocation of the main container port.
Singapore has also been ranked one of the least corrupt places on earth as well as being one of the easiest places to do business, making it one of the friendliest places for infrastructure investment.
The only downside, according to Arcadis, is that opportunities for private investment are limited as cashed-up government entities rarely need external financing sources – the most obvious exception being a 35-hectare sporting complex including the new 55,000 National Stadium in Kalland which opened in June.
Elsewhere, Middle Eastern Countries like Qatar and the United Arab Emirates are seen as cash rich economic powerhouses with double digit growth rates in construction services and some of the highest economic profiles in the world. Lifting economic prospects in the United States and United Kingdom propelled these countries into the top 10.
Arcadis global director of infrastructure Rob Mooren said the time was ripe for greater private sector involvement in public infrastructure investment as cash strapped governments still needed to finance major investments. For investors, infrastructure provides an effective form of diversification compared with equity markets.
“However, the pool of major funds that have the capacity to invest is limited, making it even more vital that markets seeking third party finance have attractive frameworks in place,” Mooren said.
- Singapore remains the world’s most attractive market for investment in infrastructure
- The United Arab Emirates (UAE) has overtaken Canada to make the top three behind Qatar and Singapore thanks to its improved economic picture, including increased investment and household consumption
- The US and the UK have entered the top 10 for the first time, underscoring improvements in their economies and, in the case of the US, the growing need for investment in infrastructure
- Asian markets such as the Philippines, Indonesia and Thailand are among the most improved countries for infrastructure investment. However, their higher business risks keep them in the second half of the index
- Key Latin American markets have shown improvement: Mexico has seen its attractiveness increase thanks to efforts to stabilise the political structure and creation of new investment opportunities, and Colombia has seen foreign direct investment increase as its economy has expanded
- Most European markets are becoming relatively less attractive because of their low growth profiles and limited investment potential
- Argentina, Greece and Venezuela remain at the bottom due to issues around managing debt, high inflation, and, in Venezuela’s case, a program of nationalisation