Real asset investors and managers are expected to favor investing in the U.S. in 2022.
For U.S.-based asset owners, the pandemic is reducing interest in new international real estate investments, said Nancy Lashine, New York-based founder and managing partner of Park Madison Partners LLC, a boutique real asset private equity placement firm.
"We are definitely seeing U.S. investors staying much more in the U.S. than they ever had before," she said.
Real estate is a relationship business — it's hard to invest where one can't travel, at least without long periods of self-isolation instituted by some countries due to the pandemic and the rapid rise of the omicron variant, Ms. Lashine said.
Even before the rise of the newest COVID-19 variant, some international real estate investors also had indicated a preference for investing in the U.S.
About 75% of the 101 respondents to a survey published in March by AFIRE, a Washington-based association of foreign real estate investors that invest in the U.S., planned to increase their U.S. investments in the next three to five years. Most expect to keep their real estate investing in Europe (54%) and the Asia-Pacific region (62%) the same.
Respondents to AFIRE's survey included 64% institutional and non-U.S. based investors and 23% U.S.-based investor and money managers.
Similarly, global infrastructure managers anticipate expanded infrastructure investment opportunities in the U.S. in 2022, especially as a result of the $1.2 trillion Infrastructure Investment and Jobs Act. Signed into law by President Joe Biden on Nov. 15, it includes $550 billion for everything from roads and bridges to electric vehicle infrastructure.
However, for managers investing in the renewable energy infrastructure sector, if the Build Back Better Act, a nearly $2 trillion measure pending in the Senate, fails to pass, it will dampen the investment opportunities, said David Scaysbrook, co-founder and managing partner at $2.8 billion money manager Quinbrook Infrastructure Partners Group, City of Gold Coast, Australia.
The Build Back Better Act, passed Nov. 19 by the House of Representatives, offers near-term investment stimulus that should entice private capital to accelerate the construction of more clean power plants, invest in new U.S. manufacturing facilities, establish a U.S. hydrogen sector and create electric vehicle infrastructure, among other projects, he said.
"We still think that overall it will be a very positive growth story for U.S. green energy, notwithstanding Build Back Better," Mr. Scaysbrook said.
Part of the reason is that inflation is continuing and investors are concerned about indexing returns for inflation for the first time in a long time, he said. This will continue to lead investors to infrastructure assets with contracted revenues designed to keep up with inflation, Mr. Scaysbrook said.
However, due to supply chain issues that are increasing costs around the globe, Quinbrook executives plan to be more selective as to which projects they will invest in 2022, he said.