The European data centre market is poised for significant growth in the coming years, with forecasts indicating a substantial increase in demand. Total international bandwidth usage is projected to rise by an impressive 31% CAGR until 2030. This growth is expected to be evenly spread across Europe, primarily driven by the significant impact of artificial intelligence (AI) on the industry. The European AI market is forecasted to grow at a robust annual rate of 15.9% (CAGR 2024–2030), serving as a key driver for the surge in data centre demand. 

However, amidst this rapid growth, the industry faces several challenges. Energy supply and strains on power grids will remain significant issues for at least the next 12–24 months, necessitating innovative solutions such as on-site energy production to maintain operational efficiency. Additionally, sustainability constraints and regulatory frameworks are expected to expand, leading to a shift towards more sustainable practices and technologies. 

This transition will likely encourage a move towards a more decentralised network infrastructure, focusing on optimising energy usage and minimising environmental impact, especially given the location-agnostic nature of AI. Certain regions, such as Nordic cities and tier 2 cities across Europe, are emerging as key hubs for data centre development, benefiting from abundant renewable energy sources and supportive regulatory environments. 

The pace of infrastructure growth and improvement is expected to accelerate, as evidenced by significant submarine cable projects and data centre schemes in the pipeline for the next three years. With 51 new European data centre projects due to be delivered in the next four years, totalling approximately 1,300 MW, the European data centre power capacity is projected to reach around 12,400 MW by 2027, although this remains below the growth of total international bandwidth projections. 

Hence, despite the high number of data centre deliveries expected until 2028, the European market is expected to remain largely undersupplied across all European jurisdictions. This is likely to result in continued rises in building and rental costs, reflecting the increasing demand for data centre facilities. 

Given the combined challenges of energy infrastructure, sustainability initiatives, scale expansion, and mitigating obsolescence risk, the industry will require significant capital expenditure (CapEx). As a result, rising private equity flows are anticipated in the market as the industry seeks to invest in its core business. Improved transparency due to new mandatory reporting EU regulations is likely to attract a growing number of investors seeking opportunities in this burgeoning sector, thereby increasing market liquidity. The strong fundamentals of the market are also expected to further drive consolidation and M&A strategies, making the market less fragmented. 

Prime yields are expected to remain stable for most of the year, with a slight inward movement towards the end of the year as market dynamics evolve. 

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