As Europe recovers from the  financial crisis, investors such as  IFM anticipate an increase in sales  of existing infrastructure assets.  And these brownfield opportunities  are often accompanied by easily  understood regulatory systems and  more predictable cash flows.  Matina Papathanasiou, a  partner in the global infrastructure  boutique at Queensland  Investment Corporation (QIC),  echoes Mangini. She says the  long history of private ownership  of infrastructure in developed  markets contrasts with the trend of  government-owned infrastructure  in emerging markets.  And it can be more difficult to  transact with a government than a  private investor.  “The political situation [in  emerging markets] may be more  fluid, with a wider range of  potential policy outcomes than in  developed markets. This makes the  future regulatory framework more  uncertain,” she says.  Papathanasiou also stresses the  importance of investors having local  knowledge and a physical base in  emerging markets.

Understanding  these specific markets, their  dynamics and major players is  important because they can be  much more localised and tricky for  foreign investors.  “Market structures, legal and  regulatory frameworks and political  influences are generally assessed as  having greater risk than developed  markets, [and] currency risk can be  both greater and harder to manage,”  she says.  Papathanasiou also outlines the  importance of investors needing to  identify the right sub-sectors and  work with appropriately qualified  people who have the experience and  skills needed to efficiently execute  complex projects. This is because  infrastructure players in India are  local and often lack global expertise.  In China, however, AMP  Capital’s Garling believes investing  is going to get easier. He bases this  belief on regular announcements  from the authorities about foreign  investment regulations.

“Almost every week there  is another announcement that  liberalises and encourages foreign  direct investment in the country –  and particularly in infrastructure,”  says Garling.  The AMP Capital  Infrastructure Research Report,  published in December 2010, backs  this up. “The Chinese government  will continue economic reform to  encourage private investment and  reduce the reliance of economic  growth on investments and exports,  thereby ensuring the sustainability  of long-term growth,” the report  states.  Garling adds that India has  undergone similar liberalisation.  He says infrastructure investment  opportunities in the country only  exist because the government  identified six years ago that a lack  of investment in the sector was  “the single most important thing  holding growth back”.  In due course, the Indian  government liberalised investment  procedures to make it easier for  foreigners to make the most of the  opportunities available, he says.  At QIC, Papathanasiou says  the main challenge of investing in  Indian infrastructure is the lack  of a stable and reliable regulatory  system.