Infrastructure investments in the real world are closed from the outset

Challenge 5: Today's real world infrastructure investments are closed from the beginning

Real world infrastructure and property equity investments have not yet found their way into the mass market.

Most interesting and profitable infrastructure and property investments are mostly accessible for the wealthy part of the population. Due to mostly high prices and other high entry barriers, such as:

• High property prices, whose growth is fuelled, among other things, by the current high inflation rates.

• Additional and high acquisition costs, depending on the region up to +20%, incl. taxes

• Premium off-market infrastructure projects and properties hard to access for retail investors

• REITs/ private funds or crowdfunding are often non-transparent due to portfolio investment structures, offer low returns, allow no real ownership and are often characterized by limited tradability and low liquidity

Infrastructure, including real estate is the biggest asset class in the world, but characterized by illiquid markets and inefficient processes:

• High transaction costs

• Illiquidity due to inefficient processes

• Slow and complex transactions

• Long holding periods due to additional and high acquisition costs

Siloed marketplace with local market participants and international investment complexity

• Mostly local offers to local buyers

• Local expertise and information asymmetry between buyers and sellers

• Cross-border investments often difficult and complex

Local infrastructure projects are often based on specially established consortia that exclude private investors or local communities when it comes to financial inclusion and profit participation:

• Large and local infrastructure projects lack inclusionary designs for local social communities

• The lack of efficient procedures in local authorities often slows decision making down

• In local administrations there is rarely a single source of truth

• The additional debt caused by the pandemic has widened the investment gap

• Local authorities are mostly unable to develop investment and financial participation models to involve the local community on a regular and larger scale.