Institutional investors increase allocations to private infra and private real estate

Written by Adam Cadle

18/03/2025

Private infrastructure and private real estate saw the biggest year-over-year increases among alternative asset classes in relation to the percent of institutional investors planning to increase allocations, Nuveen’s Equilibrium Global Institutional Investor Survey has revealed.

The number of investors jumped from 35% and 24%, respectively, in 2024 to 50% and 37%, respectively, in 2025. Furthermore, investors are being selective in targeting specific high-growth areas within both markets, such as data centres and private infrastructure debt.

Data centres have emerged as a leading priority, with 65% of investors planning to increase allocations to real estate focused on digital infrastructure, reflecting the rapid expansion of cloud computing and AI-driven demand. Government initiatives aimed at modernisation and sustainability are further fuelling investor interest in infrastructure. Over 30% of investors who are planning to increase private fixed income assets are looking at energy infrastructure credit.

Insurers based in EMEA indicated particular conviction in private real estate, with 46% of this cohort planning to increase allocations over the next two years, compared with only 27% last year.

Within Europe, the strongest interest is coming from German investors where more than half (51%) plan to increase allocations to private real estate compared with 24% last year.

Institutional investors continue to deepen their commitment to private markets, with 66% planning to increase allocations to private assets over the next five years. More than 90% now hold both private equity and private credit, a sharp rise from 45% in 2021, underscoring the expanding role of private markets in institutional portfolios.

The survey also revealed that institutions are grappling with the dual imperatives of addressing climate risk and capturing attractive return opportunities. Investors are adopting a more balanced and pragmatic view of the energy transition, with 73% of respondent agreeing that near-term energy needs cannot be met without incorporating both traditional and renewable energy sources.

“We are seeing a shift toward strategies that combine the practicalities of current energy needs with the ambitions of a sustainable future,” said Steel.

While fewer investors now view the low-carbon transition as inevitable — 61% compared with 79% in 2022 — the commitment to clean energy remains strong, with most institutions prioritising clean energy and carbon reduction either as part of net-zero goals or to capture compelling risk-return opportunities.

Overall, 44% of institutions have net-zero commitments while another 25% plan to in the coming 12 months. Even among the roughly 30% who do not intend to set net-zero commitments, the majority (64%) say they are still investing in clean energy strategies or reducing carbon in their portfolios.

Interim milestones are gaining traction. More than half of institutions (51%) with net-zero goals have set interim 2030 targets, while 37% have established 2025 benchmarks to guide short-term progress. The vast majority of investors with 2025 goals (95%) say they are on track or partially on track to meet those targets.

While 45% of institutions identify nature loss as a top five economic risk, only three in 10 are increasing their focus on nature-related themes within their portfolios. This likely reflects the fact that nature-related investing is still a developing area, with many allocators in the process of educating themselves and building their understanding.

Among those prioritising nature-based investments, 79% are seeking strategies that go beyond sustainability to proactively mitigate environmental degradation. Sectors such as water and waste management, pollution reduction and recycling are emerging as key opportunities, offering a dual benefit of environmental risk mitigation and attractive return potential.

Respondents included 800 institutional investors globally, with 110 from the UK. Only investment decision-makers with more than US$500m in assets were surveyed (between October-November 2024), with the UK firms representing a total AuM of US$2.9trn.

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