Australian infrastructure deal value drops by 31% in Q1

But volumes are predicted to improve in the coming months.

According to a report from Dexus Research, global infrastructure deal value in Q1 2024 was 28% lower than the same quarter last year at US$191.2 billion. This trend was mirrored in Australia, where total infrastructure deal value in Q1 2024 was 31% lower than the previous year. 

“While high interest rates are weighing on deal activity, volumes are expected to improve in the year ahead assuming the interest rate tightening cycle ends. Investment demand will again be supported by infrastructure’s defensive characteristics and secular trends such as the energy transition, digital transformation and demographic shifts,” the report said.

Here’s more from Dexus Research:

State Governments have been working to accelerate infrastructure developments in social and affordable housing. The New South Wales (NSW) state government has launched Homes NSW which is aimed at rebuilding the social and affordable housing system, streamlining the building and maintenance of publicly owned and operated housing to drive collaboration between state and federal government, sector experts, peak bodies and local councils. The Queensland (QLD) State government has earmarked sites for social housing PPPs in Pimlico, Townsville to pilot a ground lease model as part of the “Homes for Queensland” programme which will deliver 1 million homes by 2046. 

In the energy sector, the NSW government is accelerating a package of reforms to enable EnergyCo to allocate a tranche of access rights, ahead of financial close of the Central West Orana Renewable energy zone (REZ). The QLD government have identified 12 potential sites for REZs that could generate 22 GW of renewable power, with the first site being the Callide REZ in central QLD.

The state government of Victoria is accelerating planning approvals for renewable energy projects which will improve investment certainty. New renewable projects in Victoria will be treated as significant economic developments. Victoria has A$90bn worth of investment in its renewable projects pipeline. 

The Australian data centre market is set to face surging demand led by the rapid adoption of cloud computing, internet of things, remote work and the artificial intelligence boom. At the same time the sector faces supply constraints, due to long lead times for construction projects and challenges with finding sites with access to adequate power and fibre optic cabling.

Many operators are seeing value in partnering with industrial developers. Sydney and Melbourne remain the key markets for data centres with operators becoming open to developing in outer metro areas to gain access to sites that can meet power requirements.