What does 2025 have in store for infrastructure investors? Here is Steer’s outlook
Steer’s Antonio Beltran Arranz explores key investment trends for 2025, from rail modernisation to renewable energy growth.
2025 is set to be an interesting year for investors; here, Steer’s Commercial Due Diligence lead Antonio Beltran Arranz outlines his perspective on the next 12 months.
After a dynamic 2024 with key political milestones globally, the infrastructure investment sector today looks at a more settled landscape.
Last year, political events on both sides of the Atlantic compounded longer-standing issues of inflation caused by the pandemic and conflict in both Europe and the Middle East. This led to a slowdown in infrastructure investment.
The outlook for 2025 is promising but some challenges will remain.
Highly anticipated interest rate cuts are expected but unlikely to materialise at the speed desired due to continuing uncertainty around inflation. Tariffs, elections and political ambiguity in some of Europe and America’s biggest economies can add to this sentiment of uncertainty.
However, amongst the uncertainty, there remain robust policy areas that will encourage investors, particularly in the area of sustainability. Investors will continue to deploy capital from their existing funds as well as continue fundraising efforts, to meet the necessary investment needs in the infrastructure space.
Steer, in collaboration with Amberside Advisors, has put together four key areas to look ahead in 2025.
- Rail: The modernisation and digitisation of rail infrastructure continue to drive investment across Europe, with significant developments encouraging onlookers. Building on its potential to encourage modal shift, further market developments are expected in 2025, including the ‘second wave of liberalisation’ of high-speed rail in Spain, competing high-speed rail services between London and the continent through the Channel Tunnel, the evolution of Proxima and other open access operators into the French market and the continued implementation of European Train Control System across the continent. These make rail a very attractive sector going forward, given governments’ efforts to encourage passengers off planes and onto trains. Rail freight also continues to gain traction through investment in more sustainable locomotives and wagons to attract freight off the road.
- Bus fleet electrification: 2025 will see the continued acceleration of bus electrification across Europe, with national and regional governments working towards the ambitious targets set out in the EU Green New Deal. Battery electric bus technology has matured significantly, and investors are gaining confidence and showing interest in innovative models. Electric bus charging infrastructure also offers an additional asset class which can attract interest from institutional investors and infrastructure funds, as governments look to accelerate the pace of the transition through investment.
- Ports and maritime: Decarbonisation is also a pressing issue in the maritime industry, with actors in the sector looking at hybrid and electric vessels and onshore power supply (OPS) at port terminals to meet net-zero ambitions. A study by the European Sea Ports Organisation (ESPO) last year found that sustainability and the energy transition is the second biggest investment priority for port authorities. Synergies between more sustainable ports and onward logistics through rail can further strengthen the realisation of sustainability objectives.
- Renewable energy: Renewable energy continues to see growth in investment. Within that, certain countries are focusing on accelerating investment to make best use of their natural resources. In Southern Europe, investment in photovoltaic solar energy infrastructure is booming, with Italy, Portugal, Spain and Greece all seeing increases in transactions by volume or value in 2024.
What can Steer do?
Last year, Steer’s commercial due diligence and financial due diligence teams helped more clients than ever to make robust and sound investments. Our broad expertise across the fields of transport, infrastructure and energy, coupled with technical knowledge and experience with clients across the board, makes us the perfect advisor for your decision-making.
To discuss how Steer can support your infrastructure investments in 2025, contact Antonio Beltran Arranz at a[email protected].
