Real Estate News
'Mega-events' to drive infrastructure investment Invesco
14 Aug 2012
GLOBAL - Upcoming sporting 'mega-events', combined with government support for overseas investment, should make Brazilian infrastructure the asset class du jour for institutional investors, according to Invesco Perpetual emerging market fund manager Dean Newman.
Newman said a government-initiated £8.6bn (€10.9bn) infrastructure investment programme ahead of the 2014 World Cup and 2016 Olympics would create multiple investment opportunities for institutional investors, especially fund managers.
PwC has estimated that the overall infrastructure investments for the two events could rise to £53bn.
However, he stressed that infrastructure spending would not be limited to sporting facilities.
Airports, hotels, public transport, roads and utilities will be upgraded under the £277bn Growth Acceleration Programme (PAC), which is also behind a school-building sub-programme.
Stimuli including tax cuts for overseas investors are likely to accelerate investment in projects such as the refurbishment of 13 Brazilian airports ahead of the World Cup and the construction of a high-speed train line between São Paulo and Rio in time for the Olympics.
Public-private partnerships (PPPs) could be used to raise finance for the railway project.
"Not only would such partnerships offer opportunities for private sector participation, but the public funding aspect also provides a degree of protection against risk for investors," Newman said in a note.
He added that Invesco's existing Brazilian investments in property development and real estate companies would benefit from the PAC initiative.
"We are already well placed to take advantage of the infrastructure developments and other related sectors that are set to benefit from preparations for these mega events," the note said.
"Whether it is directly investing in infrastructure projects or taking a holding in companies that are likely to benefit from this growth, such as the suppliers of raw materials or construction firms, these major projects create many investment opportunities."
Author: Shayla Walmsley