Almost two thirds of institutional investors say they will increase allocations to infrastructure in the coming year, according to a new survey.

Research from Infrastructure Investor and Meridian Infrastructure, an independent infrastructure fund, found investor bullishness was tempered by nervousness over the political commitment to infrastructure and pricing concerns. Nevertheless, sixty-two per cent planned to boost investment in the next 12 months, against just two per cent cutting allocations.

“Pension funds and other institutional investors’ appetites around the world are increasingly turning to infrastructure as a means to providing stable, long-term returns,” Meridiam Infrastructure founding partner Thierry Déau said.

“Since the global financial crisis, the perception of infrastructure as a safe haven for investment has increased.”

Among both those already investing and potential investors, regulatory instability was perceived as the biggest barrier to investment, with concerns over a lack of long-term political commitment also cited.

“A lack of long-term political commitment to infrastructure is what keeps a lot of institutional investors up at night,” said Dan Gunner, director of research and analytics at Infrastructure Investor. “To many investors, the risk that the regulatory environment in which they put their capital to work could shift with changing governments is enough to either limit or totally kill off their appetite for the asset class.”

High costs involved in bidding for infrastructure projects (for existing investors) and a lack of clear investment opportunities (for others) were also significant barriers.

The most immediate worry, however, was pricing pressure on core brownfield (existing) infrastructure. Ninety-four per cent of institutional investors were either a little or very concerned over pricing in the next 12 months.

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