Real Assets: Opportunities at the Intersection of Real Estate and Infrastructure

Historically, there has been a clear distinction between real estate and infrastructure. Real estate has generally been associated with large, fragmented markets and opportunities for active value creation, while infrastructure has been characterised by specialised assets, high barriers to entry and more structured cash flow profiles.

While both asset classes sit within the broader real assets universe, they have traditionally been managed by different teams, funded from different capital pools and assessed using different underwriting frameworks.

That distinction continues to hold true for many core assets today. However, the emergence and institutionalisation of operational real estate and core-plus infrastructure is increasingly challenging the traditional boundaries between the two.

At the same time, investors are placing greater emphasis on the underlying characteristics of an asset than on the asset class label itself. Asset criticality, revenue durability, barriers to entry, inflation linkage and exposure to long-term structural growth themes are increasingly driving capital allocation decisions.

As a result, significant investment and M&A activity is occurring in sectors that exhibit characteristics of both real estate and infrastructure.

Data centres, land lease communities, social and affordable housing, student accommodation, healthcare, social infrastructure and cold storage are all examples of sectors that increasingly sit between the two asset classes.

Data centres provide perhaps the clearest illustration. While they physically resemble a real estate asset, much of their value is derived from infrastructure attributes such as access to power, transmission capacity, fibre connectivity and network resilience. Depending on the investment model and ownership structure, they can be underwritten through either a real estate or infrastructure lens.

The growing overlap can also be seen in capital formation. A rising number of global managers now operate under broader real assets strategies rather than maintaining rigid divisions between property and infrastructure. Similarly, institutional investors are increasingly assessing opportunities through a common framework focused on the quality and resilience of cash flows rather than traditional asset class designations.

The A$1 billion acquisition of Serenitas, one of Australia's leading land lease community operators, in 2023 provides a useful example. The buyer consortium included Mirvac Group, a major ASX-listed real estate group, and Pacific Equity Partners, which invested through its Secure Assets Fund, a core-plus infrastructure vehicle. The willingness of both investors to pursue the same opportunity highlights the increasingly infrastructure-like characteristics of the land lease model.

Similarly, the A$24 billion acquisition of AirTrunk by a Blackstone-led consortium in 2024 is perhaps the most prominent example of investors treating what was once regarded as specialist real estate as critical infrastructure. The transaction attracted capital from both real estate and infrastructure pools and reflects the growing importance of digital infrastructure within institutional portfolios.

Another benefit of this convergence is the information advantage it can create.

Many of the themes driving investment activity today are inherently cross-sector. The growth of data centres requires an understanding of power markets, transmission infrastructure, land availability, planning approvals and real estate development. Likewise, investment opportunities in logistics real estate are increasingly influenced by developments across ports, freight networks and broader supply chains.

As a result, insights developed in one sector increasingly inform investment decisions in another. Likewise, relationships established through investing in one asset class can also create proprietary access to adjacent opportunities. Rather than operating in silos, managers are increasingly leveraging a broader understanding of how assets, networks and capital flows interact.

In our view, this information synergy is becoming an increasingly important source of competitive advantage for investors and advisors with cross-sector capability.

For investors, the convergence of real estate and infrastructure creates opportunities beyond simply expanding the investable universe. Assets that sit between traditional sectors can attract capital from multiple investor groups, broadening buyer universes and enhancing liquidity. It also creates opportunities to build scaled thematic platforms that may not have existed within a single asset class.

The distinction between real estate and infrastructure is unlikely to disappear entirely. However, the historical boundaries between the two are becoming increasingly blurred. For investors and managers, this overlap is creating a larger opportunity set, unlocking broader pools of capital and opening new avenues for value creation.

In light of this trend, it is important to build deep M&A and debt advisory capability across the real assets spectrum, embedding cross-sector and product expertise in teams to ensure clients’ evolving needs are met. We expect continued strong momentum in M&A and investment volumes at the intersection of the asset classes.