Proportion of institutional investors allocating to infra due to increase globally to 60%

Written by Adam Cadle

10/09/2025

The proportion of institutional investors allocating to infrastructure is due to increase globally from 49% to 60% by 2030, as they look to private markets to combat geopolitical risk and macroeconomic volatility.

According to research by IFM Investors, nearly half of investors (47%) cited diversification, inflation hedging and resilience as their principal reasons for allocating to private markets.

Investors reported that infrastructure equity and debt investments have met or exceeded return expectations in the last 12-18 months. More than half (57%) said infrastructure equity returns exceeded expectations, while 49% reported the same for debt investments. Net return expectations for infrastructure equity are now 13.4%, up 200bps from 2024, and nearly on par with private equity (13.65%). Infrastructure debt net return expectations are 9.6%, up 170bps from 2024.

The report highlighted that while core strategies remain popular, investors are moving up the risk/return curves.

Seven out of 10 investors (71%) seek opportunities that straddle private equity and infrastructure; almost half (46%) target value add strategies; and more than two thirds (67%) think the mid-market space is an attractive area of infrastructure investment.

Luba Nikulina, chief strategy officer at IFM Investors, said: “Fears around geopolitical shocks and macroeconomic uncertainty are pushing institutional investors to rethink investment strategies and explore alternative assets. In times of market stress, public asset prices often become volatile and correlated, undermining traditional diversification and driving a shift toward private markets for more effective risk management and growth potential.

“Valued for its potential to deliver equity-like returns with lower volatility, infrastructure is an all-weather asset class that comes into its own during times of uncertainty.

“As well as addressing essential global needs such as energy, transportation, and digital connectivity, we’ve also observed a significant pick-up in the expected returns from infrastructure, both on the equity and debt sides, with an expectation of more alpha coming out of these asset classes.

“While investor appetite for infrastructure is high, deal supply must accelerate. Regulatory reform can help faster planning approvals, clarity in cross-border frameworks, and government-backed revenue mechanisms are all key instruments. We believe with regulatory support; the asset class has the ability to grow as a magnet for investment.”

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