In Bridging Continents, the 2019 CMS Infrastructure Index, we see that infrastructure is connecting people worldwide at an unrelenting pace. With sustainability, innovation and digital transformation at the heart of government agendas, investors are finding new and exciting opportunities on a global scale, including 5G, subsidy-free renewables, smart cities and PPP in new markets.
This year’s CMS Infrastructure Index ranks 50 countries in order of investment attractiveness. There are some big shifts since our 2017 Index and Germany has taken top spot. Germany’s focus on sustainability and innovation is the driving force behind its position. The country is making climate action an essential part of the political agenda and supporting this through a number of offshore wind projects, the construction of a fourth electricity highway and an extensive EV charging programme.
The UK’s story is not so positive. We see the UK fall from fourth in 2017 to ninth in 2019. The Brexiteffect. Without Brexit, the UK would rank fifth. There is a steady pipeline in some infrastructure sectors: for example, rolling stock renewals in England and transport in Scotland. There is also a shift from primary to secondary investments, with more opportunity for secondary market investors in rail, airports and energy. However, unsurprisingly, the political uncertainty has led to delays for flagship projects and a decrease in lending to UK projects.
Another country to note is China, which has risen over 10 points since the 2017 Index and is now in 18th position. 5G is instrumental in China’s increased ranking due, in part, to major corporations such as Huawei and ZTE; over 10 million advance orders for 5G data plans were submitted to China’s three mobile operators, and they will deploy a total of 130,000 stand-alone 5G base stations across the country by the end of 2019.
As the world focuses on climate change and sustainability, we see this transferring to the infrastructure sector too. Infrastructure assets play a vital role in climate change mitigation and environmental, social and governance (ESG) criteria are becoming a top priority for infrastructure investors and important to projects. However, the sector is facing a number of challenges, including an absence of consistent standards and, as a result, limited guidance on how to measure and report performance.
Regulators globally are working to create their own frameworks in this area but, with many countries creating their own, international operators will face a complex matrix of requirements for their different assets around the world.
In this year’s report, we see some very strong representation from the Americas. Latin America has some mega interconnectivity projects, presenting some exciting developments. Examples include a 3,500km submarine fibre optic network from the north to the south of Chile and the recently completed 10,000km subsea cable connecting California to Chile. On the other side of the continent, Brazil is working on the innovative 9,300km EllaLink subsea cable system bridging between the American (Brazil) and European continents (Portugal and Spain).
Overall, the infrastructure sector continues to present a positive picture in an uncertain world. Governments globally are investing heavily in infrastructure assets to stimulate their economies. At the same time, there is an abundant support of capital as investors look for long-term stable investments.
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