Infrastructure 2025 Outlook

By the time any view becomes a majority view, it’s no longer the best view. Somebody will already have advanced beyond the point which the majority have reached.¹

Friedrich Hayek, Nobel Prize winning economist

In 2025, the macro backdrop for private infrastructure is undoubtedly positive. Economic growth is resilient, inflation remains above average, and interest rates are declining. Valuations have also fallen in recent years, offering relative value compared to public markets. All stars appear aligned for the asset class, but here is a simple truth – there is no easy money left in infrastructure.

Technological disruptions, crowded trades, and valuations are key investor debates across all asset classes. Private infrastructure is not immune. Secular trends such as the 4Ds (decarbonization, digitalization, deglobalization, and demographic change) have opened up new investment opportunities, but sentiment may have become unbalanced.

At a high level, it’s hard to argue that infrastructure is crowded. Private infrastructure is only 4% of institutional investors’ portfolios², and historically delivered stable risk-adjusted returns. However, it’s difficult to dispute that there is some hype in sectors such as renewables and digital infrastructure. On the other hand, traditional infrastructure such as utilities, transportation, and waste appears overlooked.

In our 7th annual infrastructure outlook, we try to navigate the increasingly complicated investment landscape. We discuss where opportunities lie, and how to think about underwriting assumptions to avoid crowded trades and value traps. On the recent US elections, we argue that investors are underestimating political risks, although strong electricity demand and the unintended consequences of policy changes will be important mitigants. Finally, we discuss why 2025 offers a window of opportunity for infrastructure debt with the looming maturity wall.

¹ The Constitution of Liberty, Friedrich Hayek, 1960.
² 2024 Institutional Infrastructure Allocations Monitor, Hodes Weill and Cornell University’s Program in Infrastructure Policy, June 2024.