ULI: Infrastructure Funding To Grow

WASHINGTON, DC-For years European and Australian governments have funded infrastructure projects from toll roads to water utility and electrical plants through public private partnerships. This business model has been more the exception than the rule in the US to date. But, a new analysis by the Urban Land Institute and Ernst & Young predicts that this form of funding will become more popular in the coming years in this country. That means, “Not only will it lead to a revitalized infrastructure here, but it will also open new opportunities to institutional investors,” Chris Lawton, a partner with Ernst & Young tells GlobeSt.com.

Infrastructure 2007: A Global Perspective predicts infrastructure will emerge as a new asset class for institutional investors, such as pension funds, which are seeking stable growth that can keep up with inflation. Already in Europe, the report says, a secondary market is poised to develop in which early-in investment banks sell holdings to longer-term pension funds who have gained confidence in the consistent track records of this new asset class.

The report leads off with the dismaying finding that the US’ transportation infrastructure–airports, public transit, railway systems, roads and bridges–is an emerging crisis that will eventually erode cities’ abilities to compete globally. This is due to years of underinvestment by the government.