Infrastructure Quarterly: Q4 2025

Broad-based sector performance

Recently, the U.S. has been in the headlines with its first government shutdown in seven years, abrupt trade policy announcements, and yet, global and U.S. equities have soared (Figure 1). Alongside central bank rate cuts, the surge is in large part driven by Big Tech companies ramping up AI capital deployment to achieve a head start in the race to develop winning AI products. While investors show anxiety about rising Big Tech valuations, private infrastructure continues to demonstrate stability. It maintained double-digit returns, ranging between 10%-13% gross of fees across time periods.

Modest economic growth is expected for most regions, though major economies may experience a slowdown. CBRE IM forecasts U.S. GDP growth to average 2.0% over the next five years, challenged by labor supply and trade policies. In Europe, ongoing uncertainties have dragged domestic activity; fiscal and monetary support is expected to drive average GDP growth of 1.4% in the Eurozone and 1.3% in the U.K. In Asia-Pacific, robust domestic demand is likely to offset resistance from trade policies, positioning the region to lead in GDP growth.

Figure 1: Infrastructure, bonds and equities annualized total returns, %

Against this backdrop, infrastructure stands out as a steadfast and defensive asset class. Dissecting investment performance by sector reveals that private infrastructure delivered broad-based returns in the past three years (Figure 2). Digital infrastructure capitalized on technological advancements while power generation and power grids benefited from rapid electrification. Transport met its typical return targets, however, renewable energy segments such as offshore wind experienced supply chain disruptions.

Figure 2: Private infrastructure annualized total returns for selected sectors, gross of fees, last 3-years, %

Private infrastructure fundraising reached a new milestone in Q1-Q3 2025, surpassing $175 billion for the first time, with momentum expected to continue through year-end (Figure 3). In terms of sector-specific strategies, renewables represented the largest share at about two-thirds of capital allocations, while data centers accounted for close to 20% of sector-focused funds. Mega funds capable of deploying into large-scale deals in these sectors are expected to drive elevated activity. Preqin forecasts annual fundraising in North America at $79 billion annually through 2030.

Figure 3: Infrastructure fundraising, USD in billions

While fundraising growth may be more subdued in Europe than in North America, it is on track to trend higher than in the past. In the U.K., the demand is reflected in national strategies offering an entry point for private capital. The recently signed Mansion House Accord by 17 defined contribution (DC) pension schemes sets an ambition to allocate at least 5% of their assets to U.K. private markets, including infrastructure, by 2030. The accord is a meaningful fundraising force that can unlock much needed capital for upgrading and expanding U.K. infrastructure.

While core+ and value-add funds attracted an equal share of investor capital this year, the performance by risk strategy shows divergence. Core/core+ infrastructure funds continue to post robust returns higher than value-add funds on a net-of-fees basis (Figure 4). The pool of infrastructure funds has grown over time and, therefore, the median return of an infrastructure fund is closer to the aggregate industry level. The data indicates a more consistent median performance across funds in the core/core+ space compared to value add, which may be due to their stronger downside protection and regulatory tailwinds.

Figure 4: Private infrastructure annualized total returns by risk strategies, net of fees, %

A boost in private infrastructure investment

Global private infrastructure investment continues to trend positively as we approach year-end, with dealmaking up 22% year-over-year (Y-o-Y), totaling slightly over $960 billion (Figure 5a). This growth is largely driven by a resurgence in greenfield financing, which has regained momentum following a brief slowdown in the same period last year. The two leading sectors—renewables and digital infrastructure—continued to capture investor attention this past quarter.

Figure 5a: Private infrastructure dealmaking by deal type, USD in billions

Europe accounted for most of the global M&A activity by deal count, solidifying the position of European countries as the bedrock for mid-market infrastructure deals. North America dominated the landscape by deal value, while Asia-Pacific made headlines with a downturn (Figure 5b). Investment in U.K. infrastructure has turned a corner and now accounts for 10% of the global volumes. Investors’ perception of U.K. infrastructure is more favorable on the back of recent regulatory decisions, supporting capital expenditure growth for power and water utilities, as well as the reinforced government commitments to clean energy.

Notable U.K. transactions in 2025 include the financial close of £5 billion export credit-backed debt for the Sizewell C nuclear project to build a 3.2 GW power plant in Suffolk, England. U.K. airports saw an active M&A year with the sale of ownership stakes in Birmingham Airport, Bristol Airport and London City Airport to a consortium of infrastructure funds and a local government pension scheme. Airport M&A valuations have remained elevated, factoring in strong passenger demand. AviAlliance’s acquisition of the U.K. airport group AGS Airport for an enterprise value of £1.5 billion equates to about 23x EV/EBITDA multiple, according to Infralogic.

Figure 5b: Private infrastructure dealmaking, by region, % share

Power and utilities

Global electricity demand is forecasted to moderate from its 2024 pace of 4.4% but still grow by 3.3% in 2025 and 3.7% in 2026, according to the International Energy Agency (IEA). Power demand remains near decade-high levels, underpinned by structural demand drivers from industry, electrification of transport and data centers. This sustained momentum underscores a critical challenge in the widening gap between electricity demand and available supply. It highlights the urgent need for investment in generation capacity and grid resilience.

In 2026, global electricity demand is set to grow at twice the rate of total energy demand, with consumption expected to reach a record 29,000 terawatt-hour (TWh). Asian countries account for most of the forecasted net increase and are leading the global shift in electricity demand from decarbonization efforts and accelerated deployment of heat pumps (Figure 6). In the U.S., demand growth is now projected to outpace earlier expectations while the EU finally saw the end of demand contraction in its industrial sector.

Figure 6: Annual change in electricity demand by regions, 2019-2026, in TWh

Global economic uncertainties and their impact on industrial activities remain a key risk to the forecast. Recently, the International Monetary Fund (IMF) downgraded its global GDP growth outlook marginally from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. Global electricity demand from data centers is also subject to a wide range of outcomes. It is projected to double to about 945 TWh by 2030 under the base case scenario and potentially reach 1,700 TWh in an upside case, assuming stronger AI adoption. In a downside scenario where AI adoption progresses more slowly than anticipated and supply chain constraints and emerging bottlenecks delay capacity expansion, electricity demand growth will be limited to approximately 700 TWh.

Renewables

While global power demand is on an upward trend, the outlook for renewable energy has seen downward revisions due to recent policy changes. The International Energy Agency now expects 4,600 gigawatts (GW) of new renewable installations by 2030—248 GW less than its 2024 forecast. Regionally, the U.S. accounts for the largest downward change in renewable electricity capacity driven by a series of policy reversals, the accelerated phaseout of key tax incentives and increased regulatory constraints on renewable development (Figure 7). India is rapidly positioning itself as a leading hub for renewable energy with combined solar PV and wind generation rising by 20% Y-o-Y. The government has made significant strides in expanding electricity access and integrating renewable energy into the grid. Australia has accelerated its climate ambitions aiming to double emissions reductions and achieve a clean electricity target of 82% by 2030.

Figure 7: Renewable electricity capacity, changes compared to previous forecast, 2025-2030, %

Focusing on U.S., investment across all power generation technologies will be required to meet rising electricity demand. The market consultant Aurora Energy forecasts U.S. power load to increase for the first time in two decades by 2.1% annually by 2035. Both renewables and battery energy storage, alongside natural gas, will be essential to support this growth. At the same time, renewables and storage are available to deploy at shorter timeframes, given already procured connection to the power grid (Figure 8). Coupled with strict renewable energy standards in certain states, the U.S. remains an attractive market for clean tech deployment despite shifts in federal energy policy.

Figure 8: Additional power load and generation across U.S. independent system operators (ISOs), 2025-2030, TWh

Digital infrastructure

The concept of the “fourth industrial revolution” is gaining momentum, with AI at the forefront of the digital transformation. Investments are flowing into the development of advanced AI processes and the supporting digital infrastructure, though progress is constrained by supply-side constraints. Legacy power grid and power supply availability are two pressing concerns in new data center development to scale AI adoption.

In the U.S., grid interconnection delays have become a major bottleneck. Projects often face longer wait times for grid access approvals than actual construction time. Co-locating renewable energy sources with data centers presents a potential solution. It enables a data center facility to meet up to 70% of its energy needs through on-site generation but it still needs to source the remaining 30% from the grid.

While the long-term growth prospects for the AI market remain strong, uncertainty persists around the timing of adoption, market size and the pace of technological advancement. Deloitte’s latest Connected Consumer Study indicate that AI is increasingly being experimented with or used regularly, delivering positive impacts on consumers’ lives (Figure 9). AI is integrated into daily life, reshaping work patterns and innovation cycles, but consumers remain wary. The study identifies concerns around transparency and safeguards when using generative AI. In a competitive market, technology providers that prioritize control, privacy and responsible innovation are better positioned in building deeper consumer engagement.

Figure 9: Relationship to GenAI systems and technologies, %

Transport

Tariff hikes and disruptive trade policies may impact U.S. port operators and the logistics value chain (air cargo, trucking and rail). Container volumes and tonnage are likely to decline once tariffs materialize and to the extent they are passed on to consumers. So far in 2025, export activity from the eurozone to the U.S. surged at elevated rates driven by trade front-loading (Figure 10). The reversal was slow to materialize in the second quarter of 2025, but a more substantial decline in trade volumes is expected in the coming quarters.

Focusing on air cargo markets, the global demand increased 2.9% Y-o-Y to October 2025, according to IATA. While the demand in North America is on a downward trajectory, the Asia-Pacific region and Africa exhibited elevated growth rates of 6.8% and 14.7% respectively. The Asia-North America lane experienced strain as tariffs and a more restrictive trade stance have begun to weigh on growth. However, resilient consumer spending and historical investment in transport infrastructure under the Bipartisan Investment Law might partly mitigate the adverse tariff impact.

Figure 10: Eurozone trade flows to the U.S., per month, EUR in billions

Two key themes are shaping the outlook—the challenge of meeting accelerating electricity demand and the uncertainty surrounding AI adoption. Both trends represent significant opportunities for infrastructure and provide a foundation for the asset class to stand at the center of growth. As electrification and digitalization advance, infrastructure plays a critical role in the energy transition and AI-driven innovation.

Quarterly Pulse: The words that matter

For this year-end edition of the Infrastructure Quarterly, we analyzed 2025 Google Trends data to understand market sentiment. By examining keyword search frequency, we uncovered shifts in public interest and will highlight emerging themes that may influence investment perspectives in the real assets and economics fields. While some terms were searched more frequently than others on Google, each has maintained strong visibility throughout the year. The figure below shows the popularity of the term artificial intelligence, and including variations of the term would demonstrate that technology is trending even higher than presented.

Interest over time for selected words on Google Trends, 2025

Infrastructure Quarterly: Q4 2025