Global infrastructure outlook trends in 2025
- The data center and decarbonization mega-trends will animate infrastructure fundraising and deal activity in 2025
- Significant opportunities will emerge in building out utilities and power provision to support the data center boom
- Signs of a soft landing after the rising interest rate cycle bodes well for toll road, airport and port assets
- After a tough year for managers, fundraising sentiment should improve as sliding base rates drive up investor appetite for yield
The infrastructure space is well-positioned for a solid year of deal and fundraising activity in 2025 as interest rates subside and macro-economic conditions improve.
As has been the case for other private markets asset classes, 2024 has been a challenging year for infrastructure. Annual fundraising is at risk of falling below 2023 levels, according to Infrastructure Investor, while CBRE has recorded declines in year-on-year infrastructure M&A during 2024.
The next 12 months are likely to remain challenging and unpredictable for infrastructure managers and investors – after all, infrastructure fund dry powder has recently hit a record 24% of total global AUM, according to Preqin, indicating managers’ caution to deploy. But falling interest rates will help to put the asset class in a more stable position.
For deep dives into key trends driving the 2025 global infrastructure outlook, read on.
Infrastructure investment trend #1: Fundraising on a firmer footing
Fundraising activity will derive potentially the greatest benefit from lower rates, as investors emerge from the defensive crouch of the last 24-36 months and resume the search of yield as interest rates come down.
Infrastructure will be ideally placed to serve investors as they gradually look for opportunities to take on more risk, as it offers returns at a premium to the risk-free rate while retaining defensive, inflation-resistant qualities, according to asset manager ClearBridge Investments. For investors who are still wary of downside exposure as economies emerge from a period of high inflation and rising interest rates, but have to sustain yields, infrastructure will be an ideal fit.
The 2025 infrastructure vintage also holds the potential to deliver attractive returns for investors.
ClearBridge Investments analysis shows that over the long-term infrastructure asset returns correlate strongly with infrastructure asset earnings growth. Since 2022, however, a recalibration of risk and valuations across all asset classes has seen infrastructure asset valuations drop even though earnings growth has proven resilient. This delta between earnings and valuations will fall back into the long-term pattern, presenting early movers with an opportunity to invest at potentially highly attractive entry multiples.
Infrastructure investment trends #2: Going green and going digital
Fundraising and deal activity in infrastructure will be driven by the two mega-trends that dominated the asset class during the last 24 months – decarbonization and data centers.
Both subsectors are underpinned by robust underlying fundamentals and have experienced little if any impact from recent capital markets dislocation.
Decarbonization and targets to reduce emissions to net zero by 2050 have become compliance and regulatory essentials for all sectors, with regulators mandating higher energy efficiency standards and disclosure on emissions.
The cost of building out new, green, low emission infrastructure, as well as repurposing existing legacy infrastructure assets will involve substantial resources and investment. According to S&P Global estimates $5 trillion of annual investment in energy transition will be required every year between 2023 and 2050 to meet Paris Agreement emissions reductions goals – triple current levels
Governments will be unable to shoulder this obligation alone, opening up an investment opportunity of vast scale for infrastructure players.
The fundraising market is already pivoting in this direction, with renewable energy fundraising the largest category for sector-specific infrastructure fundraising in 2024, according to Infrastructure Investor. And the deals are following suit – per Preqin’s Infrastructure Global Outlook, renewable energy accounted for 69% of primary deals in 2024 – its highest share since at least 2006.
Decarbonization will not be a one-way street, especially as the costs of energy transition are felt by taxpayers and consumers, pushing decarbonization into the political sphere. Nevertheless, the fact that decarbonization can also address other long-term energy pain points, such as cost of energy and energy security, gives the net zero project the necessary momentum to withstand any political or consumer resistance. The risks posed by climate change are simply too severe for governments to ignore.
In the data center space, meanwhile, similarly robust fundamentals will power sustained investment opportunities.
Demand for data is surging, particularly given the huge amounts of computing power that will be required to support the rapid growth of the AI sector, which private markets platform Partners Group forecasts will grow at a remarkable compound annual growth rate (CAGR) of 42 percent to become a $1.3 trillion market by 2032.
Investors and dealmakers have been racing to gain exposure to this dynamic sector, via both equity and debt investment strategies. The scramble for data centers shows little sign of slowing in 2025.
Infrastructure investment trend #3: Classic categories. New opportunities
But while data centers and decarbonization will grab the headlines (and with good reason) 2025 also promises to be a good year for more established infrastructure categories.
Indeed, as data centers grow so will the core utilities required to service them, most notably power generation. According to McKinsey, the power generation capacity required to support electricity-hungry data centers will have to more than double by 2030. Grid connection capacity will have to be ramped up in similar increments.
Outside of utilities, other sub-segments such as airports, toll roads and ports are also set for a positive 2025, as the inflationary pressures that have weighed on consumer spending start to ease, and travel activity and demand for goods increases.
According to the International Air Transport Association (IATA) global air passenger numbers are forecast to exceed 5 billion in 2025 for the first time, while global container volumes passing through ports are expected to climb by as much as 7 percent in 2025, according to shipping and logistics group Maersk. Toll road traffic is also expected to increase, particularly in centers with growing populations, with usage on most routes now back at or above pre-pandemic levels.
New verticals may be expanding the options and growth opportunities for infrastructure stakeholders, but “old-fashioned” infrastructure assets look set to remain as attractive and valuable for investors as ever.
