With e-commerce, homeworking, e-learning and telemedicine now a part of our routine, the demand for data storage (expected to increase significantly before the pandemic) is booming.

Development in infrastructure has grown in the last two years to accommodate the surging amount of data traffic. This is anticipated to continue, as witnessed by the significant submarine cable projects and data centre schemes in the pipeline for the next three years.

For this energy-hungry industry, access to power has always been centre stage. Yet, since the start of the Russia/Ukraine conflict, the subsequent European energy shortage in Europe has had some critical impact on the sector, with some restrictions starting to be implemented. Data centre operators will (increasingly) have to deploy on-site energy in the future to circumnavigate the increasing number of moratoriums.

Large data consumption regions will continue to attract developer and operator attention. However, in the short term, new development projects are more likely to flourish in locations where energy is secured (such as the Nordic region), largely self-efficient and green.

Whilst data centre efficiencies have improved significantly over the past ten years; much more will be needed to make the industry truly “green”, not least in light of the expected digital surge expected for the next 5-10 years. To actively embrace ESG credentials and secure energy sources, operators will have to raise large amounts of investment.

In the current gloomy economic context, the highly positive fundamental of the market will continue to exacerbate consolidation and M&A strategies and attract an increasing range of investors. We expect rising private equity flows in the market as the industry needs to invest in its core business.

Private investors will increasingly use JV and entity acquisitions to enter the data centre market to circumvent the lack of transparency and the high level of specialism required in this niche market. Consolidation strategies amongst the major market players will increasingly lead towards more sale and leaseback opportunities.

_{Read the articles within Spotlight: European Data Centres below.}