GLOBAL - Investors including pension funds will continue to invest in core European infrastructure assets despite halting privatisation processes, the credit squeeze and political opposition, according to a new report by Ernst & Young.
The consultancy firm's eight-market analysis found, despite tight credit markets, scheduled core infrastructure projects such as transport will close as planned this year.
Chief among the opportunities for private investors, which can include pension funds is pan-European transport infrastructure - road, rail and port, which according to E&Y is estimated to cost €556bn, but receive €46bn from EU funding.
However, the report's authors acknowledge planning, building and operating infrastructure in Europe and worldwide is becoming an increasingly complex and challenging process for governments and private investors.
Against the strain on existing infrastructure assets operating beyond capacity political opposition, they cite political opposition to the development of new assets on environmental, economic and social grounds.
The authors also pointed to faltering public-private partnership (PPP) programmes designed to maximise returns from the divestment of state-owned infrastructure assets.
While France has disclosed 35 PPP agreements since 2004, Germany has since 2006 attracted €1.4bn from private investors.
If PPP activity in Germany should pick up, foreign investors might have opportunities to team up with German partners in bidding on contracts, suggests the report.
In the UK, France and Greece, social infrastructure assets such as education and health facilities are also targets for private investment, according to James Neal, head of Ernst & Young infrastructure advisory.
In contrast, infrastructure in the Netherlands lags the rest of Europe because of government budget deficits and regulatory and environmental barriers. The report, in particular, identifies construction delays caused by environmental activists objections to motorway connecting The Hague to Amsterdam.