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Europe data center construction market worth $14.2 bn in 2028

According to Arizton’s latest research report, the Europe data center construction market will grow at a CAGR of 5.23% from 2022-2028.

The growth of the Internet of Things (IoT), cloud computing, and artificial intelligence/machine learning (AI/ML) is a key driving factor for the European data center construction market. Government initiatives aimed at digitalizing their respective countries have instilled confidence among operators to establish operations in the region. For example, the UK government has implemented a cloud strategy to promote cloud adoption within the country. This has led to a continuous increase in the adoption of cloud services by small and medium-sized enterprises (SMEs) as part of their digital transformation efforts. Many organizations in Europe are progressively migrating their workloads to the cloud, resulting in a surge in demand for data center construction. Furthermore, both local and global data center providers have invested heavily in the European market, leading to significant growth in the construction of self-built hyperscale data center facilities.

Key Insights

  • There is a high demand for retail colocation services in developing countries, driven by organizations with limited budgets and demanding geographical distribution capacities. Additionally, there is increasing demand for wholesale colocation services from cloud providers, enterprises, IoT, and big data organizations.
  • The UK, Germany, and France are among the top contributors to the Europe data center construction market in terms of investment, area, and power capacity. Western Europe led the way with a cumulative growth of over USD 57 billion during the forecast period. The presence of FLAP cities such as Frankfurt and Paris has attracted significant regional data center investments.
  • Germany leads the Europe data center construction market with an overall investment of more than USD 1.8 billion in 2022 and a cumulative growth of more than USD 12 billion expected during the forecast period.
  • The growth in data center development has led to increased competition among data center contractors implementing new sustainable methods. Operators are opting for these contractors to enhance their green credentials.
  • Labor shortages, budget constraints, and construction delays drive significant greenfield and modular data center development growth in certain regions. This has increased the revenue of modular data center solutions providers such as Vertiv, Dell, and HPE.
  • The government’s interest in promoting data center investments through the land for development and renewable energy procurement, and reducing electricity tariffs, will drive the colocation market in Europe during the forecast period. The trend of procuring renewable energy to power data center facilities will likely continue, with several operators signing power purchase agreements with renewable energy companies.
  • Digitalization across businesses will contribute to a surge in data center investments by colocation, cloud, internet, and telecommunication providers. Telecom companies such as Ericsson, Orange, T-Mobile, A1 Telekom, O2 (Telefonica), Vodafone, and others are responsible for deploying and introducing 5G services in the region.
  • New players will likely enter the Europe data center construction market due to the increasing demand for data storage and hosting services. Still, they will face competition from local and established global players. However, supply chain disruptions, increasing inflation rates, shortage of skilled workforce, and political disturbances in some European countries will likely harm the market.
  • Apart from construction, installation, and commissioning services, data centers also invest in improving physical security, monitoring, and management of facilities through data center infrastructure management (DCIM) on a real-time basis.

Arizton

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