FINANCE | 10.13.2020

Why the time has come to invest in infrastructure

Elena Gamonal

Infrastructure projects supervisor at MAPFRE

Redacción MAPFRE

If there is anything that the current situation has taught us, it’s that we need to look after our planet more than ever, we need to have efficient communication channels and safe transport and we need to protect agriculture, health and education — all of which can be defined as infrastructure.

But let’s not focus on just the present, let’s think about the future, about the ever-increasing consumption demand. I’m not just talking about electricity, I’m thinking far beyond that. We need to think about the efficient consumption of water, which is an increasingly scarce resource; about the ability to store generated energy and use it on demand; about how we consume technology and how we use healthcare and educational facilities, and the ever-advancing technologies that goes with that. We need to think about mobility needs, with shorter journey times and safer methods of transport and about new ways of working and living. Infrastructure is the key to making all this possible, to keep moving forward from a social responsibility perspective, more than any of us dares to imagine.

The economic resources required to meet these needs on a global scale far exceed the funding available to any government, which is why governments and public administrations at all levels are the first to support private initiatives to deliver these essential aspects, starting by approving the appropriate legislation. This explains why infrastructure is currently being supported by both public and private interests, meaning investing in these assets worldwide is now more secure. If we also consider the macroeconomic situation that faces us, with low interest rates and investment products with adjusted returns in highly competitive markets, infrastructure investment provides a breath of fresh air for any portfolio. If we compare risk-free investment products—the current return on which is almost non-existent—with alternative infrastructure investment products—which provide much more attractive returns—it is at least worth considering investing in infrastructure.

During the ongoing global health crisis, infrastructure investment products have shown great resilience to changes in the economic cycle. In other words, there is a clear consensus, which I support, that they have become a safe haven investment. Throughout this period, these investment products have continued to yield adequate returns because, despite the poor performance of economic indicators, demand for infrastructure has remained high as meeting basic needs such as electricity, transport, water, technology, health etc. has been prioritized. This poor correlation between infrastructure investment and other more conventional investments makes the former an attractive and necessary product in a globalized and unpredictable world such as ours. It is the ideal addition to any investment portfolio.

One important point we should not forget is that, in a world where technology is advancing at breakneck speed and where immediacy has become almost a necessity, it’s very important to have the support and knowledge of multidisciplinary experts to accompany us throughout the process and give us peace of mind that our investments are in the best hands.

Investing in infrastructure is not only investing in assets, but also in development and excellence, in job creation, in helping to reduce the carbon footprint and in improving quality of life. All that in itself sounds like a lot, but when coupled with potentially attractive returns, it is definitely an asset class worth exploring.