Investment in European data centres expected to boom over next two years
Debt and equity investors anticipate a boom in European data centres, according to research commissioned by DLA Piper. The majority (92%) of those surveyed expect the overall value of investment into Europe’s data centre infrastructure to increase over the next 24 months.
Organisations use data centres for remote storage, processing and distributing data. The energy intensive industry is estimated to use 3-4% of the worlds total electricity.
The study involved 50 senior executives based in Europe. It was conducted by Acuris Studios on DLA Pipers behalf.
According to the report, European Data Centre Investment Outlook: Opportunities and Risks in the Months Ahead, participants expect to see an increase of 10-29% over the next two years.
These projections may be on track. Last year saw record investment into European data centres, racking up a total of €1.5 billion. However, €1 billion was invested in the first half of 2019, indicating another notable rise.
All respondents agreed that Brexit uncertainty has negatively affected data centre investment levels. Indeed, 56% of equity investors called the impact ‘significant’. However, the weakness of the sterling may make UK assets may look like a bargain for Eurozone investors, it said.
Respondents think that our ever-expanding need for data storage facilities will result in rent charges to increase for centres with superior technology. Over a third of participants expect this increase will be 10% or more.
While a Europe-wide boost has been anticipated, Germany has been pegged as the county that will see the biggest growth in data centre project investment over the next 24 months. Investors also expect the UK to see some real growth, followed by the Netherlands and France.
Ireland is also projected to see a growth in investment. For John Magee, intellectual property & technology partner at DLA Piper in Ireland, this is no surprise; “Ireland has become a strategic global and regional hub for data-rich businesses in sectors such as technology, life sciences and financial services. International businesses are increasingly looking at data considerations, such as the GDPR’s one-stop shop regulatory mechanism, when structuring their operations. Data centres are an important part of the overall data ecosystem.”
“What makes data centres so attractive to many investors? Strong fundamentals help,” said Anthony Day, intellectual property & technology partner at DLA Piper. “While data centre investment can involve a higher level of risk as compared to other types of infrastructure assets, demand for Big Data, cloud computing, artificial intelligence and the Internet of Things is rising significantly. The macro trend is that these technologies drive significantly increased demand for data and digital services and, by extension, the buildings and equipment that make them possible.”
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