Closing Asia’s infrastructure gap
By 2030, an estimated US$20 trillion in infrastructure investment will be needed across Asia. Currently, the region invests only about half of that amount every year (US$880 billion), 90% of which is financed by governments or government-linked agencies.
Most infrastructure projects are not financially viable on their own. Built first and foremost for their public benefits, they generate limited revenue to be attractive for investors. As a result, investors and financiers are unwilling to finance infrastructure projects where investment returns are often too low, break-even periods are too long and/or the risk is too high.
Real estate strategies can play a significant role in making infrastructure projects more bankable – raise the projects’ investment yield - through value creation and revenue generation schemes that are attractive to private sector investors. They are particularly effective in closing the financing gap for transportation infrastructure, including airports, seaports and mass rapid transit systems.
This report examines strategies that can be tapped to finance transport infrastructure projects through real estate asset monetisation and longterm revenue generation.
In order to be successful, real estate strategies around infrastructure projects must achieve the public benefits expected by government authorities and communities while meeting market requirements and generating reasonable financial returns at an acceptable risk level for private investors.