Infrastructure Investments

Infrastructure is an alternative investment that includes airports, roads, utility assets, such as energy commodity transmission lines, and after use treatments. Other than shelters and shops every development around us comes under infrastructure.

Cable system, broadcast assets, power transmission line, water line, gas transmission, prison schools, charging points, public wifi, transportation amenities, bridges, highways, and other facilities that promote habitable environment are classified as infrastructure. Infrastructure aids rural development, making basic amenities accessible and reachable. Without infrastructure like assets, the government would have no option to spend and

  • Huge investments go into a project that will produce cash flows for eternity.
  • Newer employment is created and will sustain till the construction gets finished.
  • Private or the public sector grows in turn tax revenue increases.
  • The locality around the project develops.
  • Money is infused into the economy by building productive assets other than incentives.

Assets that are already constructed and are in operation, serving the public or a particular operation is called Brownfield assets. Greenfield assets are which yet to be constructed, on paper, yet to be operated, about to finish projects etc. Basically, any infrastructure that hasn’t started with positive cash flows are called as greenfield assets.

Brownfield Investment:

Brownfield investments assure high cash flow, but the capital appreciation is almost zero because they are used sparingly, that no value will can be added. The value depends on the future cash flows it make which are certainly high. Highway Toll, Local water services, Gas generation and transmission are all highly profitable because they are inelastic in demand and no private passenger takes a longer route or get private service that snatches a significant part of the disposable income.

Greenfield Investment:

Greenfield investments, are uncertain investment cash flows, the cash consumption virtually ends in the near future on the other side has huge growth potential. Infrastructure to support electric cars can be apt to be classified as greenfield, the plan is under execution, the supporting services are nascent to support the huge infrastructure, demand points like supermarkets, car parking and other precise points are being utilised to ensure revenue generation. These projects tend to turn up well when the anticipated demand is attained.

These types of constructions are registered under Public Private Partnership (PPP), where the government identifies demand and the private executes the projects or in the case of bypass, private build and maintain the construction by making a tender payment to undertake a project.

Real estate Vs Infrastructure:

Real estate investing differs in what kind of asset is built and what kind of service the investments provides to the owner or other people who avail.

How to become a real estate investor?

Real EstateInfrastructure
A relatively lower life spanLonger and is pushed more than its expected life span.
Usage can be obsolete sometimeConsumers never go without service, Toll collection for highways.
Relatively lesser fund to start. Barrier to entry is low.Only deep pocketed corporate can enter. Barrier to entry is high.
Land acquisitions, land rates, legalisation or simple processes.Built in a greatly densed location for maximum utilisation. Multiple stages of permissions are required.

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