- McKinsey estimates $106 trillion of global infrastructure investment is needed through 2040, led by transport/logistics, energy, and digital buildout.
- Asia accounts for roughly $70 trillion of the need, with the Americas and Europe far behind but still facing major renewal and decarbonization demands.
- Private capital is growing (about $1.3T AuM and $87B raised in 2024), but deployment is constrained by weaker deal volumes and tougher rates/valuation dynamics.
- Execution risks—permitting and regulatory friction, labor and supply bottlenecks, and geopolitical and cost uncertainty—could slow project delivery and returns.
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The McKinsey framework provides a compass for capital allocation: $106 trillion across seven verticals by 2040 to modernize both legacy and “new” infrastructure. Of that total, transportation and logistics dominate with $36 trillion, followed by energy and digital infrastructure—reflecting massive shifts prompted by climate goals, urbanization, AI/digital transformation, and evolving societal expectations.
Asia emerges as both the most demanding and the most promising region: with $70 trillion projected investment, it represents over two-thirds of the global requirement. The Americas ($16 trillion) and Europe ($13 trillion) lag behind but still represent large, complex markets grappling with legacy asset decay, decarbonization targets, and digital investment catch-ups.
On the financing side, private infrastructure AuM topping $1.3 trillion by mid-2024 underscores growing institutional appetite. Yet fundraising, while growing (14% year-on-year to $87 billion in 2024), remains below peak levels (notably 2021-22) when interest rates were lower and exit expectations more optimistic. Furthermore, only a limited number of very large flagship funds (> €20B) are closing.
Deal value trends show compression: transaction volumes fell (~8% in 2024 after a sharper drop in 2023) across the infrastructure universe, suggesting that while capital sits ready, deployment is challenged. Sectors like digital infrastructure and energy transition are counter-currents of growth, buoyed by AI and clean energy demand.
Strategic implications for stakeholders:
- Investors: Must widen mandates to capture cross-vertical intersections (e.g., data centers + renewable power + cooling water), prioritize resilience in supply chains, and integrate ESG and climate risk fully into underwriting.
- Governments: Should streamline permitting/licensing, de-risk regulatory regimes (especially for novel verticals), and deploy PPPs or hybrid models to attract private capital.
- Operators / Developers: Need to drive operational excellence, invest in digital tools (predictive maintenance, platform-based models), and seek service-based revenue streams that go beyond just asset ownership.
Open questions remain: What will real inflation and input cost trends do to capital intensities, particularly for energy and materials? How will geopolitical fragmentation (trade barriers, supply constraints) between the U.S., EU, China, etc., affect global infrastructure supply chains? And to what degree will labor/supply-side bottlenecks constrain delivery?
Supporting Notes
- McKinsey projects a cumulative global infrastructure investment need of $106 trillion through 2040, distributed across transportation and logistics ($36T), energy ($23T), digital infrastructure ($19T), social ($16T), waste and water ($6T), agriculture ($5T), and defense ($2T) verticals.
- Asia is expected to account for approximately $70 trillion of this need; Americas around $16 trillion; Europe ~$13 trillion; Africa $5 trillion; Oceania $2 trillion.
- Private infrastructure assets under management reached about $1.3 trillion by June 2024, up ~8% year-on-year; 2024 fundraising hit $87 billion, a 14% increase over 2023.
- Deal volume in infrastructure dropped ~8% in 2024, following a steeper 19% decline in 2023; average deal sizes have declined, but large deals in digital infrastructure and energy transition suggest emerging strength.
- Data center investment surged to $50 billion in 2024 (from ~$11 billion in 2020), driven by AI/cloud demand.
- Regulatory, labor, and valuation pressures pose constraints: investor sentiment indicates strong interest in infrastructure for its cash flows and inflation hedge, yet exit horizons are lengthening, and supply of skilled workers remains tight.