SINGAPORE is the world's most attractive market for infrastructure investors, according to a report by EC Harris, a global built asset consultancy.
Countries in the Middle East also ranked high on the firm's Global Infrastructure Investment Index, but the high GDP-growth BRIC (Brazil, Russia, India and China) markets ranked significantly lower.
The index ranks 40 countries based on their appeal to infrastructure funds. Various issues, including the ease of doing business, tax rates, GDP per capita, government policy, quality of the existing infrastructure, and the availability of debt finance were considered.
Singapore was first on all indices in the index, apart from the economic environment criteria, for which it came seventh. This criteria looked at current GDP per capita, projected GDP rate and population growth. Even though Singapore scored well in the first two parts, it is a small market without the growth potential which India, Indonesia and China - which all scored above it - would have.
However, the maturity of the business environment and the transparency of the political and legal systems played an especially important role in helping to build confidence with private investors.
The country is "a safer long-term investment in comparison to those at the lower end of the table", said the report, which also shared investment opportunities currently available in Singapore, such as the Downtown MRT rail line, the Marina Coastal Expressway and Changi Terminal 4.
"Singapore will always be an attractive market to investors however much of the existing infrastructure is already world class," said Richard Marriott, head of lenders & investors for EC Harris in Asia. "For funds, this means the biggest opportunities to drive increased profit margins are likely to come in adopting a more innovative approach to how these assets are managed, in other words, unlocking untapped revenue streams in mature assets."
Countries in the Gulf Corporation Council, such as Qatar, which ranked second, and the United Arab Emirates, which ranked fourth, were shown to be attractive regions for investors.
"Qatar does not have the biggest domestic market and household consumption is marginal," said the report. "But it has strong long-term growth prospects."
"With a US$100 billion infrastructure programme due to be implemented by 2022, it will see vast infrastructure developments."
Of the BRIC markets, which were in the middle and lower ranges of the ranking, China was the most attractive, achieving 18th place. India achieved 22nd place, while Brazil and Russia were ranked 31st and 34th respectively.
"Brazil, Russia, India and China have a promising economic environment that is attractive to investors if the business and financial risks are managed effectively," said the report. "These countries show poor infrastructure on the whole and present investors with great potential to invest in new assets."
With the present economic climate in the West, countries in Europe decreased in attractiveness, with eight out of the 12 European countries ranked in the middle of the index.
"These countries are typically cash poor, asset rich and currently experiencing an economic downturn, with limited long-term GDP growth forecasts," said the report.
However, Scandinavian markets Sweden and Norway were in the upper quartile, ranking fifth and sixth respectively. On the other end of the spectrum, Italy fell into the lower quartile at 32nd place, together with Greece, which was ranked 39th.