Australian Infrastructure Investment Monitor 2025

About the 2025 Australian Infrastructure Investment Monitor

Infrastructure Partnerships Australia and Allens are pleased to jointly present the 2025 edition of the Australian Infrastructure Investment Monitor.

This year’s report is the tenth iteration of this research and provides a comprehensive view of investor appetite and sentiment for the Australian infrastructure market. The report reveals insights into the drivers and challenges for infrastructure investors, which include superannuation and pension funds, fund managers, banks and other infrastructure professionals.

This report is informed by a survey which captures the views of international and Australian investors who together collectively own or manage over A$686 billion of infrastructure assets globally. The survey findings are furthered by insights from a series of interviews undertaken with 13 prominent members of the infrastructure community.

Investment Intentions and Preferences

KEY FINDINGS

• 85 per cent of those surveyed are highly likely to invest in Australian infrastructure over the next three years.
• Overall confidence in the likelihood of the market providing sufficient opportunities to meet respondents’ needs has strengthened, with 78 per cent expecting the market will likely meet their needs over the next three years, up 10 percentage points from 2024 and 20 points from 2023.
• Energy assets again dominate investor preferences, with grid storage and firming ranked highest (81 per cent), followed by transmission and distribution (74 per cent) and renewable generation (70 per cent).
• Data centres have entered the top tier of assets, ranking joint third (70 per cent) alongside renewable generation as investors increasingly view them as core infrastructure.
• Investor appetite for transport infrastructure has rebounded, with interest in airports up 25 percentage points, tunnels and bridges up 24 points, roads up 22 points and precincts and intermodal terminals up 21 points.
• Access to reliable and scalable power supply (52 per cent) and access to suitable land (37 per cent) identified as the biggest challenges to investment in digital infrastructure including data centres.
• Preference for regulated assets (33 per cent) has overtaken unregulated (26 per cent) for only the secondtime in the last decade.

Australia’s standing as an attractive investment destination continues

The Australian infrastructure market continues to attract strong investor interest, with 85 per cent of survey respondents ‘highly likely’ to invest over the next three years. Another 11 per cent are considering investment, while just four per cent remain unsure (Figure 1).

Overall confidence in the likelihood of the market providing sufficient opportunities has strengthened. 78 per cent of respondents anticipate the market is likely to meet their needs over the next three years – a rise of 10 percentage points since last year and 20 percentage points since 2023 (Figure 2). Over half of respondents rate opportunities as ‘reasonably likely’ to meet demand, while a smaller proportion of 26 per cent rate this as ‘highly likely’. Interviewees noted that while the outlook on long-term prospects remain positive, there’s a perception that the current pipeline lacks depth.

Figure 1: Likelihood of investing in Australian infrastructure

Figure 2: Likelihood that Australia will provide sufficient investment opportunities to meet investors’ needs over next three years

Shift in the dynamics for energy investments

For the third consecutive year, energy infrastructure assets occupy the top three positions in investor preferences (Figure 3). Renewable grid storage and firming has ranked first for the second year in a row, favoured by 81 per cent of respondents. This represents the highest level of support for any asset class since road infrastructure held this position in 2018. Transmission and distribution follow, recording its strongest sentiment to date at 74 per cent, while renewable energy generation was close behind at 70 per cent.

In contrast, appetite for hydrogen facilities has seen the sharpest decline across all assets – down 22 percentage points on last year to 33 per cent (Figures 3 and 4). This reflects the ongoing difficulties in establishing a market for hydrogen in Australia. Of the thirteen hydrogen generation projects added to the Australia and New Zealand Infrastructure Pipeline database¹ since 2021, just eight remain active – with only the $15 billion Murchison Green Hydrogen Facility in Western Australia having progressed beyond early stage planning. Interviewees highlighted Australia’s comparatively high construction costs as a deterrent to investment in emerging technologies like hydrogen.

¹The Australia and New Zealand Infrastructure Pipeline (ANZIP) database provides a forward view of major infrastructure projects and contracts across the two countries. ANZIP tracks infrastructure opportunities with a capital value exceeding A$300 million from early stages to completion, providing updates and objective analysis each step of the way.

Figure 3: Preferred Australian asset types to invest in

Figure 4: Preferred Australian asset types to invest in, percentage point difference compared to 2024

Batteries lead and onshore wind remains steady, while confidence falls for offshore

Battery and short-duration storage projects remain the top renewable energy asset class for the third consecutive year, attracting interest from 73 per cent of investors (Figure 5). With shorter construction times and easier passage through planning systems, batteries typically carry lower development risks and can generate returns more quickly. With recent improvements in cost profiles,² favourable rates of progress through to delivery³ and the increasing role of batteries in managing congestion and curtailment, this asset remains an attractive proposition for investors.

Onshore wind generation has held steady in second place at 62 per cent. ANZIP currently tracks 94 wind projects, valued at $139 billion, underscoring the scale of proposals entering the pipeline. However, these projects face several hurdles to delivery including rising input costs, planning obstacles, supply chain constraints and social licence complexities.

Interest in pumped hydro and long-duration storage has increased 13 percentage points, moving from fourth to joint third place alongside solar, interest for which fell eight percentage points. Interest in offshore wind has dropped 17 percentage points, after several notable proponents withdrew from major projects this year amid ongoing delivery challenges.

² The CSIRO’s 2024-25 GenCost Report, released in July, reported battery costs fell 20 per cent in FY2024-25.
³ Forty per cent of the energy projects on ANZIP which entered main works construction between January and July 2025 were batteries.

Interest in pumped hydro and long-duration storage has increased 13 percentage points, moving from fourth to joint third place alongside solar, interest for which fell eight percentage points. Interest in offshore wind has dropped 17 percentage points, after several notable proponents withdrew from major projects this year amid ongoing delivery challenges.

Figure 5: Which renewable energy infrastructure asset classes are attractive to investors

Interest in data centres reaches Investment Monitor high

Having consistently ranked among the top five attractive asset classes over the past three years, data centres reached their highest Investment Monitor ranking this year, claiming joint third place alongside renewable energy generation. 70 per cent of investors are interested in investing (Figure 3), up 12 percentage points on last year.

Appetite for transport rebounds, but expectations of greenfield opportunities are constrained

Investor appetite for transport infrastructure has rebounded strongly following several years of subdued sentiment. Roads and airports lead as the most attractive transport assets, each drawing 67 per cent of investor interest – increasing 22 and 25 percentage points year-on-year respectively (Figures 3 and 4). Interest has also improved for precincts and intermodal terminals (52 per cent, up 21 percentage points) and for tunnels and bridges (48 per cent, up 24 percentage points). However, while there is renewed appetite for investment, interviewees remain cautious about the availability of near-term greenfield opportunities to match demand, noting current activity is largely concentrated in the secondary market and in brownfield expansions.

Nonetheless, respondents are optimistic about longterm greenfield opportunities, noting Australia’s forecast population growth will necessitate new transport infrastructure.

Water retains investor interest, but opportunities remain elusive

Water has maintained steady investor interest over the past six years, ranking joint fourth in 2025 with 67 per cent of survey respondents signalling investment appetite. Nonetheless, interviewees consistently pointed to the lack of investable opportunities. While respondents see potential in last-mile water infrastructure and related waste services, the current market has produced little to no deal flow.

Looking ahead, respondents consider population growth and water resilience requirements may eventually catalyse investment opportunities – particularly in desalination, but for now the gap between investor appetite and actual opportunity remains stark.

Social infrastructure maintains moderate appeal, but housing policy is yet to unlock scale

Investor interest in social infrastructure has remained relatively flat. This year, 52 per cent of investors expressed interest in hospitals and healthcare, 48 per cent in social and affordable housing, and 48 per cent in other social infrastructure such as education, stadiums, and justice facilities (Figure 3).

With survey respondents reporting moderate, stable appetite for social and affordable housing, interviewees noted interest persists given ambitious national housing targets. However, they stressed that sufficient scale and volume of investable opportunities are yet to emerge, with some suggesting government support will be critical in shaping viable return and risk profiles.

When considering government interventions in the social housing market, 30 per cent of investors said interventions made them more willing to invest, while 19 per cent are less willing and 22 per cent reported no change (Figure 7).

Figure 7: Impact of government interventions in the social housing market on investors’ likelihood to invest

With private capital’s role in housing rising on governments’ agendas, highlighted by the Federal Government’s recent move to consider reforms enabling greater superannuation investment in housing supply, there is clear opportunity to harness private finance and expertise in this space at scale.

In other social infrastructure, interest in hospitals and healthcare remains comparable to previous years with 52 per cent of respondents expressing interest. Interviewees reflected on the New South Wales Government’s legislation prohibiting Public Private Partnerships (PPPs) for hospitals providing emergency, surgical and inpatient services. They noted the vast majority of Australian health PPPs do not involve the private delivery of clinical services, but rather focus on operations, and cautioned that the decision represented a loss of nuance in distinguishing between these roles.

Preference for regulated assets overtakes unregulated for first time since COVID recovery

This year’s survey shows a marked shift in investor sentiment. Preference for economic revenue regulated assets has risen by 19 percentage points to 33 per cent, overtaking unregulated assets at 26 per cent (Figure 8). This reversal has only been seen once in the past decade of the Investment Monitor – in 2022 during the COVID-19 recovery period.

Interviewees offered mixed views on this shift. Some acknowledged appetite for regulated assets with opportunity to deploy capital at scale but flagged regulatory uncertainty and the related risk profile as an enduring concern. Most opted for a balanced approach with exposure to both regulated and unregulated assets to manage portfolio risk.

Figure 8: Preferred regulatory model for investments

The Australian Infrastructure Market and Emerging Conditions

KEY FINDINGS

• Australia has overtaken North America and Europe this year as the most attractive region for investment, selected by 56 per cent of respondents.
• A strong knowledge of market participants (96 per cent), track record of infrastructure business (84 per cent), and ESG credentials (76 per cent) identified as Australia’s top attractions.
• Regulatory and policy frameworks (63 per cent) and planning approvals (59 per cent) are creating unease for investors, particularly in energy.
• 41 per cent of survey participants believe that taxation is the most significant challenge to investing in Australian infrastructure.
• New South Wales has strengthened as a destination for capital, while sentiment towards Victoria has softened.

Australia tops regional rankings for providing the most compelling opportunities, partly attributed to increasing caution towards North America

Australia has been identified as the most attractive infrastructure investment destination for the first time since 2021, overtaking North America which saw a substantial decline (Figure 9). 56 per cent of those surveyed identified Australia as providing compelling opportunities, reversing a downward trend in Australia’s relative attractiveness which began in 2022 and reached a record low in 2024 with 43 per cent of participants selecting Australia.

Figure 9: Regions with most compelling opportunities

Interviewees have identified Australia’s position as a stable investment destination, bolstered by its comparative political and economic stability, as underpinning its attractiveness. Nonetheless, interviewees have cautioned against complacency in the market – suggesting some of this shift in sentiment can partly be seen as a response to more volatile conditions elsewhere. Investors have noted that without an uplift in opportunities to meet demand, Australia will not capitalise on this interest in the market, leading investors to look for overseas opportunities.

Having occupied a favourable position in recent years, investor sentiment towards North America fell materially this year, decreasing by 20 percentage points to 48 per cent. Interviewees pointed to increasing caution underpinned by political and policy shifts including fluctuating tariff policies, regulatory and economic uncertainty, and the repeal of the Inflation Reduction Act (IRA).

This contrasts sharply with the optimism that was present in the last two editions of the Investment Monitor, with 81 per cent of participants identifying North America as having the most compelling investment opportunities in 2023, buoyed at the time by significant market incentives for renewable energy. While interviewees agree current policy conditions are impacting confidence, their perspectives are varied on the longer-term outlook. Some noted policy ramifications will continue to impact sectors including renewable energy while assets including ports and freight will be adversely affected by tariff policy. Nonetheless, others noted that overall, due to the scale of the market investors will not be deterred from investing indefinitely.

Investors are optimistic about New Zealand, but concerned about a lack of bipartisan support

New Zealand was introduced as a standalone market for the first time this year, ranking fourth most attractive with 26 per cent of respondents selecting it as a compelling destination (Figure 9). The New Zealand Government has recently signalled new opportunities for private finance including progressing two PPPs and exploring other avenues to harness private capital.

Interviewees have welcomed the revival of private capital opportunities. However, they stressed that political consensus and policy stability will be the key to sustaining investor confidence and realising the market’s potential.

Historical strengths of the Australian market continue

With its global appeal bolstered, Australia’s position as a stable and secure investment destination continues. Respondents identified Australia’s strong knowledge of market participants and partners (96 per cent) and track record of infrastructure business (84 per cent) as the top two factors underpinning its attractiveness (Figure 10).

Confidence in economic stability has softened, falling from third to fourth position this year. Last year, 86 per cent of participants identified this as a factor supporting Australia’s appeal, compared to 72 per cent this year – a fall of 14 percentage points (Figure 11). However, interviewees have noted that Australia remains resilient compared to other markets, a setting they expect will continue in the near-term.

Figure 10: What makes Australia attractive for infrastructure investment?

Figure 11: What makes Australia attractive for infrastructure investment, percentage point difference compared to 2024

Marked improvement recorded for Australia’s ESG credentials

Australia’s ESG credentials have risen sharply, ranking as the third most compelling reason to invest in the market. 76 per cent of respondents selected ESG as a driver of Australia’s attractiveness (Figure 10), a 31-percentage point increase year-on-year. Perceptions of Australia’s performance across ESG pillars also improved, with 51 per cent of respondents identifying Australia as a leader in environmental performance, up 19 percentage points (Figure 12). Social and governance indicators also improved, each rising six percentage points year-on-year.

Figure 12: Australia’s performance in ESG elements

Interviewees pointed to the influence of superannuation funds as a driver of this shift, while others highlight a broader maturity in business strategy, with ESG increasingly seen as both a short-term opportunity and a driver of long-term resilience.

However, several of those interviewed questioned Australia’s environmental ranking, considering the European market to be well ahead. Others attributed the rise of Australia’s environmental performance to momentum in the energy transition, though anticipated this may stagnate as governments look to firming infrastructure to meet near-term reliability gaps.

Previously flagged market challenges persist, with new concerns emerging

Labour costs (56 per cent) and red and green tape (56 per cent) have emerged as the top challenges facing Australia’s infrastructure market, each cited by over half of survey respondents (Figure 13). These issues ranked first and third in 2024 and are becoming increasingly pressing as the energy transition moves into delivery.

Industrial relations issues (41 per cent), competition for assets (41 per cent) and taxation challenges (41 per cent) follow behind. Lack of opportunities has also emerged as a core concern, increasing by 16 percentage points since 2024 to 37 per cent.

Figure 13: Most significant challenges to investing in Australian infrastructure

Figure 14: Most significant challenges to investing in Australian infrastructure, percentage point difference compared to 2024

Red and green tape has rapidly become one of the central impediments for investors

Red and green tape has emerged as one of the major impediments to investors deploying capital in Australia. In 2023, just 24 per cent of respondents identified it as a significant challenge, rising to 48 per cent in 2024 and up to 56 per cent this year.

Labour costs and industrial relations challenges remain top of mind for investors

Labour costs remain a leading concern for investors, topping the rankings for the second consecutive year, sitting alongside red and green tape in 2025 (Figure 13). This year, 56 per cent of participants identified labour costs as the biggest issue in the market.

Concerns over industrial relations has also intensified, rising 13 percentage points year on year to 41 per cent, and adding further uncertainty to already constrained supply chains. By contrast, concern over a lack of skilled personnel eased significantly, falling 30 percentage points from last year.

Interviewees pointed to construction costs including labour as key challenges, calling for governments to progress reform to enable increased access to skilled migration and address domestic workforce constraints.

Investors increasingly perceive tax settings as disadvantageous

Participants identified taxation (41 per cent) as a top challenge to investing in Australian infrastructure this year (Figure 13), up sharply from just 17 per cent in 2024. Some interviewees linked this rise to structural disadvantages to foreign investors, causing eroding returns and making Australia less competitive against other markets.

Lack of opportunities and competition for assets identified as deterrents

The proportion of participants identifying a lack of opportunities as a challenge to investing in Australian infrastructure has risen by 16 percentage points since 2024, the second largest increase behind taxation (Figure 14). This is reinforced by the 41 per cent of respondents who cited competition for assets as a major barrier to deploying capital. This underscores a widening disconnect between the theory and practice of infrastructure investment in Australia. It is clear interest remains strong and confidence in the long-term pipeline is evident, but uncertainty persists around the timeframe for investable opportunities to materialise and the depth of the pipeline. Investors caution against complacency in the market, describing the current pipeline as relatively static, with a limited flow of new public-sector projects and constrained capacity in the secondary market to absorb demand. Without a visible and scalable flow of opportunities, participants warned that Australia risks losing capital to competing markets. Interviewees have reiterated calls made in previous years for governments to take a more active role in creating investable opportunities – whether by advancing a stronger greenfield pipeline, leveraging PPPs, or recycling assets to unlock capital. Investors stressed that without such action, Australia may struggle to fully capture the pool of capital waiting to be deployed.

New South Wales leads investor preference, Victorian sentiment falls further

New South Wales has ranked as the top jurisdiction for investment in 2025, selected by 70 per cent of respondents (Figure 19). Interviewees expressed some surprise at this result, noting limited government signals on private finance opportunities – and previous signals during the independent toll review which courted sovereign risk and caused market uncertainty for a period. Nonetheless, they are watching closely for potential openings, with expectations that private capital may be sought to support major policy programs in housing and transport as these pipelines expand in the medium term.

Figure 19: Preference to invest in Australian jurisdictions

Investor preference for Victoria has declined for the second consecutive year, with only 30 per cent of respondents selecting it as an attractive jurisdiction – down 18 percentage points since 2024 and 38 percentage points since 2023 (Figure 19). For the first time, Victoria has fallen below second place in Investment Monitor rankings, overtaken by Queensland with 33 per cent support. Interviewees have attributed this sentiment to concerns over Victoria’s fiscal capacity and economic outlook.

Queensland offers a potential bright spot with strong forward pipeline

Queensland has held steady at around 30 per cent interest for the last three years as a preferred destination for investors, with respondents cautiously optimistic about its prospects. The State’s infrastructure funding has increased 124 per cent since 2021, with Queensland now allocating the second most funding to infrastructure as a share of general government expenditure of any jurisdiction in Australia. Interviewees cited high population growth, infrastructure requirements for the 2032 Brisbane Olympic and Paralympic Games, pipeline visibility and the Government’s willingness to engage with private capital as drivers of growing investor confidence.

Social licence takes priority in regional investment decisions

Investor interest in regionally located projects remains robust, with 81 per cent open to investment opportunities outside metropolitan areas (Figure 20). Notably, social licence has now emerged as the most important determinant of investment decisions, rising from fifth to first place in priority, while logistical constraints have fallen in significance by 20 percentage points (Figure 21).

Figure 20: Extent respondents would consider investing in regional projects

Figure 21: Factors affecting willingness to invest in regionally located projects

This shift in investor focus is particularly relevant given the scale of regional opportunities available. Of the Australian projects listed on ANZIP, 46 per cent are located in regional or remote areas, accounting for 47 per cent of the pipeline’s total value. While this represents a decline from 54 per cent and 56 per cent respectively in 2024, the regional pipeline nonetheless remains substantial. The energy sector is especially prominent, with 82 per cent of energy projects situated in regional or remote parts of the country, compared with 67 per cent last year, underscoring the sector’s concentration outside metropolitan areas.