Commercially Minded | Why real estate capital is moving into energy infrastructure

As traditional real estate investors look for new sources of stable, long‑duration income, the boundary between commercial property and infrastructure is starting to blur. This episode of Commercially Minded explores how that intersection is taking shape, and why energy infrastructure is increasingly viewed as a natural extension of the real assets universe.

A shift in investor mindset

Five years ago, investors tended to be very sector‑specific. Today, investors want to understand every sector and are far more open to new opportunities.

This shift is leading investors towards energy infrastructure, a category shaped by three megatrends. The first is electrification, because electricity is both a more efficient energy source and enables greater technology adoption. The second is digital adoption, including the advent of technology and AI. The third is energy security. All three are coalescing to push forward the urgency and rationale for investment.

For traditional real estate investors, the parallels with commercial property are closer than they may first appear. Where core, stable, long‑income assets once played the role of the steady engine, infrastructure now offers sound fundamentals and an emerging opportunity. The mechanics are recognisable too: contracted revenue can be thought of in the same way as a lease, with covenant strength determined by who the offtaker is, whether that is a government Contracts for Difference (CfD) round or a Corporate Power Purchase Agreement (CPPA).

The numbers underline the shift. Knight Frank's Active Capital survey, which surveyed 119 global investors with $1.4 trillion in AUM, found that infrastructure exposure is set to rise from around 12% last year to 24%. Returns sit broadly in line with what traditional investors are used to, with expectations averaging around four to 20%, while listed real estate and listed renewables benchmarks range from eight to 11%.

Why now: a backlog of demand

Alongside this growing appetite sits a longer‑term need to invest in the UK's infrastructure base. For 24 of the last 30 years, the UK has ranked among the lowest in the G7 for private and public investment, which points to a backlog of new opportunity.

With tight fiscal headroom, the necessity is for the private sector to help meet public infrastructure demand. Policy is moving in the same direction, supported by £718 billion identified in the NISTA pipeline, a 10 year infrastructure strategy, clean power 2030 targets, grid connections reform and recent planning reform.

Pension capital and scale

Delivering at this scale will lean heavily on institutional investors. The average project M&A transaction for energy infrastructure in the UK over the last five years was just shy of £200 million, compared with around £45 million on the UK commercial real estate side. UK pension reform is helping to unlock that capacity, with the Mansion House Accords and the Pension Reform Bill aiming to get UK pension funds to invest between five and ten percent of their capital into UK private assets, expected to unlock around £50 billion by 2030. Global appetite is similar: a record $289 billion was raised for closed‑end private infrastructure funds last year, predominantly focused on renewable energy infrastructure.

The takeaway

Energy can no longer be treated as a background utility that real estate simply plugs into. The era of treating energy infrastructure as separate to real estate is over, and access, cost and resilience are now active considerations that shape how buildings perform and how portfolios are valued.

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