Dive Brief:
- A survey of top U.S. real estate executives revealed that infrastructure assets figured prominently into what they believe to be the best and safest investments, according to Forbes.
- As part of the Altus Group survey, respondents were asked to invest a hypothetical $1 billion for maximum returns, and they allocated 15.5% to infrastructure, a 215% increase from last year.
- The renewed enthusiasm for infrastructure, largely due to President-elect Donald Trump's $1 trillion proposal, comes at the same time as increased interest rates and the maturation of some previous high-growth sectors that could make traditional real estate property investments less attractive.
Dive Insight:
The Forbes report also suggested that investors could be invigorated by Trump's choices to lead his infrastructure council — New York City developers Richard LeFrak and Steven Roth. Both LeFrak and Roth, who have led decades-long, successful careers in real estate development around the country, will oversee Trump's infrastructure "task force", a council of 15 to 20 builders and engineers who the president-elect will look to for cost-monitoring and other oversight. LeFrak's and Roth's positions have been likened to that of other department "czars," who hold great sway over policy but are not subject to Senate confirmation like a proposed Cabinet member would be.
Although an overhaul to the nation's crumbling roads and bridges has proven to be a bipartisan issue, Trump is expected to knock heads with Democrats in the coming months over his strategy on how to fund his program. The plan as is provides an 82% tax credit in exchange for private equity investment, a point that Senate Minority Leader Chuck Schumer, D-NY, has derided as a "gimmick." He said that even though he believed both sides could come to an agreement within the first 100 days of the new administration, direct federal spending must play a role in any major infrastructure plan to prevent favoritism toward projects that don't generate revenue, like airports or toll roads. In response, Senate Majority Leader Mitch McConnell, R-KY, said Republicans would resist any proposal of massive stimulus spending.
