Institutional Allocations to Private Infrastructure, CRE Go Up

More institutional investors are pivoting to private infrastructure and private real estate, seeking inflation-resistant returns amid unpredictable economic and geopolitical shifts, per GlobeSt.

Adapting to a Changing Market

A new survey by Nuveen, covering 800 institutions managing $19T in assets, revealed a significant institutional shift toward private infrastructure and real estate allocations.

Amid growing concerns over deficits, trade policy, and inflation, more investors are starting to target sectors that offer long-term growth, stability, and inflation protection.

Allocations to private infrastructure surged from 35–50% between 2024 and 2025, while private real estate allocations climbed from 24–37%.

European and Middle Eastern investors showed heightened interest in real estate, while North American institutions favored infrastructure investments tied to digital and energy sectors.

Targeting High-Growth Niches

Investors are becoming more selective, channeling funds into high-demand areas such as data centers, energy infrastructure, and sustainability-driven modernization projects.

Approximately 65% plan to increase investments in digital infrastructure, while 30% of those expanding private fixed-income holdings are eyeing energy infrastructure credits.

“Private market flows remain resilient, with capital sourced from public asset outflows, cash reserves, and new capital deployment,” said Harriet Steel, Nuveen’s global head of institutional.

Rise of Credit Private

The survey also reveals the growth of private credit. Nearly 50% of respondents are venturing into new private credit segments, such as net asset value (NAV) lending and energy infrastructure credit.

With alternative investments gaining traction, 40% of institutions are expanding their asset manager networks to navigate increasing complexity.

Insurers, in particular, are ramping up exposure to private real estate debt (45%) and asset-backed securities (34%), signaling a broader approach to alternative fixed-income investments. Notably, 46% of insurers are investing in energy infrastructure credit.

Sustainability Goals

Responsible investing remains a priority, with 93% of institutional investors incorporating environmental and social factors into their portfolios.

The number of insurers managing a dedicated impact investment sleeve doubled YoY to 55%, emphasizing a stronger commitment to measurable ESG outcomes.

While the transition to low-carbon energy remains a key focus, investor sentiment has shifted. In 2022, 79% believed the low-carbon transition was inevitable. By 2025, that figure had fallen to 61%.

Still, over half of institutions set interim 2030 targets to reach net zero, maintaining strong commitments to clean energy and carbon reduction initiatives.

Looking Ahead

As institutions seek yield-enhancing strategies and inflation-resistant assets, private infrastructure and real estate will remain key investments.

The evolving landscape presents opportunities for investors who can navigate regulatory shifts, sustainability goals, and sector-specific complexities.

With allocations to alternatives expected to rise over the next five years, institutional investors are poised to reshape portfolios to capture long-term, resilient growth in an uncertain global economy.