Infrastructure is exciting property investors across the globe as a 'burgeoning global asset class' that offers enormous potential in terms of variety of assets and market value.

Infrastructure is exciting property investors across the globe as a 'burgeoning global asset class' that offers enormous potential in terms of variety of assets and market value.

Initially centring on roads, railways, bridges, tunnels and airports (transport infrastructure), the range of assets has since broadened to include schools, hospitals and prisons (social infrastructure) as well as utilities, sewage treatment and waste-processing plants. And the list continues to grow.

Infrastructure investor RREEF puts the value of Europe's economic infrastructure market - services that can be charged for such as transport, utilities and communications - at some EUR 4.5 tln over the next 10-15 years. Led by Spain, Italy and France, many Western European countries have drawn up extensive, multi-billion-euro plans to bring their aging infrastructure up to scratch over the next two decades. Eastern Europe and Russia, meanwhile, burdened with outmoded communist-era systems, face a major revamp.

A wave of private money is finding its way into infrastructure through government sell-offs of state-owned assets to private concessions and public-finance partnerships (PPPs). These alliances - which offer governments the possibility of transferring the risk of cost overruns and delays to private operators while retaining ownership - were pioneered by the UK in the early 1990s in response to public funding deficits and the huge need for infrastructure improvements.

Although the pace is not as fast as in the UK and Australia, private-sector involvement in infrastructure is gaining ground in Continental Europe. 'Everyone is looking at Europe now,' says Neal of Ernst & Young. 'Government commitment to private finance is not as strong as in the UK, which has led to dithering. The whole idea of bringing in the private sector is politically more sensitive. What we're seeing in many countries is a toe-in-the-water approach, with governments tendering some projects but not others.' However the climate is changing.

The June issue of PropertyEU Magazine features an in-depth report on the infrastructure market. Click on the link below to go to www.propertyeu.info to read the full article online and to sign up for your copy of the magazine.