Infrastructure

Infrastructure viewed as ascendant asset class

Thursday, February 9, 2017

Infrastructure is a winning proposition for economic developers and institutional investors alike, maintains the head of an international association of real estate, construction and urban planning professionals. Amanda Clack, 2016-17 president of the Royal Institution of Chartered Surveyors (RICS) and an infrastructure specialist with EY in the United Kingdom, was in Toronto earlier this week to gather Canadian insight on project development, delivery and risk management.

“I think it’s a really exciting time to be in infrastructure,” Clack says. “It’s a great thing to be focusing on because governments are realizing they need to invest in infrastructure in order to maintain a city’s or country’s edge.”

Her Toronto stopover is part of fact-finding mission in major North American cities leading up to the RICS Summit of the Americas in Chicago later this spring, which will include a workshop on global best practice and future trends in infrastructure. After a site visit to the in-progress Eglinton Crosstown LRT (currently slated for 2021 completion) and a brainstorming session with players who devise policy, facilitate, build and maintain projects, she flew out to investigate the infrastructure scene in New York.

The focus on hard infrastructure — transportation, energy, water/wastewater — aligns with many Canadian concerns, including the municipal infrastructure deficit, climate resilience, the reliability of the electricity grid and traffic congestion that is undermining economic productivity. It’s also in sync with some opportunities, such as promised government funding, intensifying urban populations that can support transit and community energy, steady technological advancement and the maturing of Canada’s public-private partnership (P3) expertise.

“It is not just a Canadian issue; it is an issue all over the world,” Clack says. “Historically, we invested in our infrastructure and then we sort of took our foot off the gas, but for every dollar you invest in this, there is always wider economic development.”

She refers to the public-private “handshake” needed to foster a proficient infrastructure agenda — reasoning that governments must establish the strategic policy, provide the base funding and ensure the consistency that bolsters key business players’ confidence. Just as real estate has emerged from the catch-all alternative asset class to stand alone as an investment category, infrastructure has the fundamentals to draw a growing share of investment allocation.

“Infrastructure is an attractive asset class because it’s long-term, it’s secure and it’s reliable,” Clack affirms. “The biggest thing (to promote investment stature) is to be able to control your pipeline of projects so then people can begin to plan around that. They can see there is a 30-year pipeline of projects coming downstream.”

Along with that, she stresses the importance of RICS’ international leadership in the development of consistent industry-wide standards for property measurement, construction measurement and business ethics. Last year, the Global Real Estate Sustainability Benchmark’s (GRESB) first foray into infrastructure found that it still lacks much of the environmental, social and governance (ESG) evidence that investors can more readily find to inform their real estate decisions. Clack foresees continuing demand for, and adoption of, standards.

“What gets measured, gets value,” she says. “We want to have consistency in measurement so you can actually compare sustainability.”

At home in the U.K, Clack sits on the newly formed RICS Infrastructure Steering Group, a 10-member contingent of professionals who hold senior posts in industry and government. “It will provide leadership for a significant forum of professionals who seek to maintain and enhance value outcomes for lower levels of expenditure,” the group’s mission statement pledges.

Photo: Construction of Toronto’s Eglinton Crosstown LRT in progress.

Leave a Reply

Your email address will not be published. Required fields are marked *