London is recognised by most as the European capital for business, and the centre for trade and commerce. Today, London has the largest stock exchange in Europe and is currently the top-ranked financial centre in the world.
It also hosts the largest data centre market in Europe by total supply, and the second largest in the world.
Despite the ongoing discussions surrounding the final Brexit deal, the data centre construction market conditions for London have been hot. The London colocation market had a slow start to 2019 compared to previous years, but this has improved steadily. What has been noticeable is the continued announcements of large deals and investments, with wholesale deals moving to hyperscale.
Virtus has invested £500m into the development of five additional data centres across its London campuses, delivered over 2019-2020. This adds 76MW to its London portfolio – 36MW in Slough across LONDON3, LONDON9 and LONDON10 as well as 40MW to Stockley Park across LONDON6 and LONDON7.
Equinix, as a result of its hyperscale joint venture with GIC for the formation of xScale, is investing in six data centres across Europe, two of which will be located in London.
ING confirmed a £450m infrastructure loan to Ark Data Centres, indicating additional development in the UK, in addition to its Meridian Park site which will be going live this year.
Echelon data centres has also announced a £150m investment into a 20MW facility within London’s Docklands area.
We expect further hyperscale development deals to be announced for the London market with many breaking ground throughout the year. The results of the general election in December 2019 will of course influence matters one way or another, with considerations around data sovereignty and EU data compliance, for instance, along with Brexit.
Ireland has a good combination of developable land, energy infrastructure and available workforce. Its gateway status between the US and Europe continues to help attract foreign direct investment in all sectors of the economy, but most notably in the high-tech sectors.
Dublin’s electrical grid and planning system have been under pressure from the volume of hyperscale data centre project investment over the last couple of years. Recent research by the Irish Academy of Engineers estimated that an investment of €9bn could be needed in the Republic’s electricity sector over the next eight years to meet increased demand for power from data centres.
As data centres become more important to the Irish digital economy, new legislation has been worked on since 2018. The legislation aims to make the planning process for data centres more streamlined by reclassifying centres over 10,000 m2 as “strategic infrastructure developments” aka ‘SID’.
Data centre construction market conditions remained hot throughout 2019, with the latest industry reports from Host in Ireland noting that €1bn worth of centres are currently under construction, while an additional €3.5bn will come from centres with planning permission that are expected to be completed in the next few years. They predict that thirty-four new data centres are now likely to be operational in the next six years, in addition to the 53 which are currently active.
US data centre firm Digital Realty announced the opening of its second data centre on the Grange Castle campus in Dublin, its fifth in Ireland, while Google also expanded its facilities this year with a €150m investment on the same campus. Facebook confirmed continuing works to its Clonee data centre campus in 2019 with two new buildings to be constructed. Amazon’s new facility at Mulhuddart has also received a green light, supported by its direct investment in renewable energy via wind farms in Donegal and Cork.
Aqua Comms, Bulk Infrastructure and Google all publicly announced their involvement in the Havfrue subsea cable early last year. This cable project is ongoing and will connect the US, Ireland and the Nordics and is expected to be fully operational in the very near future.
A move to a streamlined planning application process and further pressure on a constrained resource pool make for a busy 2020 forecast in Dublin, with both existing hyperscale clients and new entrants to the market planning large scale developments throughout the year.
Frankfurt is one of Europe’s premier connectivity centres, home to the largest concentration of data centres in Germany. There is little sign of growth slowing down in 2020. Frankfurt recorded 44MW of take-up in the first half of 2019 and is set to beat London’s 2018 full-year total of 77MW, the current highest total for any individual market.
Procurement of land with a reliable power supply and securing or updating planning permission remain the major obstacles for new data centre development in Frankfurt. The cost of electricity in comparison to other European locations is high, power consumption making up a high share of typical data centre running costs when compared to other locations.
Data centre construction market conditions in Frankfurt remained hot during 2019. After a trend towards multiple expansion projects and customer fit outs during 2019, 2020 will see an increase in new build facilities launching.
Digital Realty is expanding its European operations via Frankfurt after acquiring a 34-acre land parcel in Hattersheim, close to Frankfurt Airport, expected to deliver up to 84MW in IT power capacity.
Colt also expanded this year, announcing its new Frankfurt West facility in June, with the first phase of delivery expected in Q4 of 2020.
E-Shelter completed the first 9.7MW phase of its Frankfurt 4 data centre in June 2019. Once fully built, this facility is expected to deliver 80MW of IT load. The first phase of the Etix Everywhere €120m facility on the outskirts of Frankfurt is also scheduled to launch at the end of this year. In addition, Global Switch’s second data centre in Frankfurt was operational in Q4 of 2019.
CyrusOne's Frankfurt III facility broke ground earlier this year, consisting of two four storey facilities. The 22MW development is expected to be fully completed by Q2 2020.
German companies Garbe and NDC Data Centres announced in October this year that they would join up to form NDC-GARBE Data Centres Europe, with a goal of streamlining the process of acquiring land and developing greener data centres. This new joint venture company already has two projects in Munich and Frankfurt.
Increased demand from US hyperscale companies for a presence in Frankfurt looks set to influence a busy year for continued large scale data centre construction on the outskirts of the city.
The Netherlands has one of the most advanced data centre markets in Europe, where the high quality of the digital infrastructure and positive business climate easily attracts foreign investment. AMS-IX in the Netherlands is also a world-class internet exchange with hundreds of the largest networks exchanging huge volumes of traffic.
After an intense period of hyperscale construction and fit outs during summer 2019, two municipalities within the Amsterdam Metropolitan Area announced a temporary pause in issuing new permits for new data centre projects in their regions. This was to allow them to work on a set of instruments to enable sustainable growth across the data centre industry, focused on land planning, power and economic development.
Construction market conditions are currently overheated, due to the volume of hyperscale development both underway and planned, which continues to stretch the capacity of the European supply chain.
During this year, Cyxtera Technologies announced the opening of its latest European data centre in Amsterdam, due to commence business operations during the first quarter of 2020.
Google also announced in 2019 that its overall data centre investment in the Netherlands would soon total €2.5bn, with a new facility in Agriport outside Amsterdam, while its existing site about 130 miles further north, in Eemshaven, will continue to be expanded.
Most colocation providers have continued expansion during 2019 and 2020, including an Equinix expansion of existing IBX facilities, and extension projects carried out by EdgeConneX and Iron Mountain.
Dutch-owned Interxion also announced this year that they have entered into a definitive agreement with Digital Realty to combine their businesses to create a leading global provider of data centre, colocation and interconnection solutions.
The pause on permits for the Amsterdam area is likely to stimulate opportunities elsewhere in the Netherlands during 2020, as well as increase pressure on upgrade or power intensification projects within existing facilities.
The city of Paris continues to feature in the top four data centre markets for the European region, providing access to one of Europe’s largest consumer markets and being an important hub for the exchange of internet traffic between the US and Europe, with France being a termination point for many undersea cable systems.
Land and power limitations in the capital are perhaps part of the reason there is a marked rise in investment in other cities in France such as Lyon, Marseille and Strasbourg.
In order to help France compete more closely with other EMEA locations, the French government has implemented a reduction on tax paid for electricity consumption by data centres from €22/MWh to €12/MWh. In exchange for this rebate, data centre operators have made a commitment to improve their energy efficiency by 15% over five years.
Paris is still considered by many as the most difficult location FLAP (Frankfurt, London, Amsterdam, Paris) in which to build. Approving projects can be lengthy and complex.
The overall data centre construction market conditions for Paris in 2019 are considered warm.
Equinix opened its PA8 facility in March 2019. This is its eighth IBX in the Paris metro, and the first new build dedicated to its hyperscale customers.
Digital Realty announced the acquisition of 3.5 acres of land located in Ferriers-en-Brie, east of Paris in July 2019, noting this as an important milestone in its global expansion. Its French footprint is also boosted by its recent merger with Interxion, which announced €44m of expansion investment across its Paris facilities last year.
Colt announced its own extensive investment plans for Paris at the end of 2018, increasing capacity from 9.4MW to 23.9MW.
In Q1 of 2019, a €700m research and development-focused eco-friendly data centre was announced for the Châteauroux area, known as Green Challenge 36. The project will reportedly require 100 hectares of photovoltaic solar panels.
A focus on the Normandy region by companies such as Orange has also brought data centre construction investment outside of Paris in 2019, with Orange's facility expected to be completed during 2020.
The main international colocation providers continue to invest in their Paris facilities, with many offering powered shells or wholesale development to specification for the leading cloud service providers. Large scale power density improvement programmes to maximise existing footprints are expected to increase through 2020.
Although not an established data centre hub, Spain’s physical location between Africa, Central Europe and Northern Europe offers a promising position on the global connectivity map. The capital Madrid is still considered an emerging market, although it is also the home of 'Silicon Alley Madrid', an area known for its high concentration of internet and technology companies. The area also has the highest per capita connectivity in Spain, with a large number of fibre optic networks available.
As Spain's second largest industrial centre after Barcelona, Madrid hosts many forms of manufacturing, as well as being the centre of national government, finance and insurance.
Data centre construction market conditions are considered warm with only a few publicly known construction projects ongoing. Equinix announced an expansion of its existing IBX data centre in Madrid, opening this year. Also opening in 2019 was Interxion’s third data centre (MAD3).
Last year, the 6,600km long MAREA submarine cable came online through the collaboration between Facebook, Microsoft and Telexius (a telecoms infrastructure company), connecting Bilbao, Northern Spain and Virginia, US. Construction has also started on Ellalink, a 9,200km-long submarine cable designed to satisfy the demand for traffic between Europe and Latin America, linking data centres in Madrid, Lisbon, Marseille in Europe and those in Fortaleza and São Paulo in Brazil.
Investment announcements by DAT4 referenced a booming technology startup market in Spain, and the expectation that facilities in Madrid will help firms in Barcelona, Madrid, Valencia, Sevilla, Bilbao and other technology hot-spots to expand into Spanish-speaking markets in the LATAM region.
2019 saw a major announcement from Amazon Web Services who confirmed it will open an infrastructure region in Spain, which will consist of three Availability Zones at launch, expected late 2022 or early 2023.
As a leading European capital city, further growth of cloud service provision can be expected, with most of this growth coming through wholesale leases, scalable to hyperscale.
With its well-functioning legal and political system and stringent data privacy laws, Switzerland is an extremely stable and neutral state. Its central European location and neutrality are key factors to its attractiveness to businesses looking to invest in the region, despite being recognised as one of the most expensive locations in the world to undertake construction projects.
Zurich is best known for its pharmaceuticals and financial services/banking segments, but it also has strong fibre connectivity and a robust electrical infrastructure to support development in the region.
Specific to data centres – Switzerland's strong data protection laws now stipulate that businesses with requirements for privacy locate their data in country. Switzerland’s prime hosting clusters are located in the two global cities and economic centres of Zurich and Geneva, followed by Basel, Bern and Lausanne.
The data centre construction market in Zurich has been warm during 2019, but warming up without much media coverage.
Google Cloud Platform announced in March 2019 that its new cloud region in Zurich was going live, the sixth of its regions in Europe. The launch included three separate zones to protect against service disruptions. The city also hosts Google's largest engineering offices outside of the US.
During 2019 Green Datacenter AG also communicated the opening of its new Zurich West 3 data centre facility, investing around $70.3m (70m Swiss francs) into the project. It also presented planning studies for two further data centre facilities.
In August, Microsoft announced the availability of its cloud regions in Switzerland and highlighted high demand, with two data centres up and running in the Zurich and Geneva regions.
Interxion added 2MW of critical power at its ZUR1 facility during 2019. The company also announced that it will be constructing a €122m data centre (ZUR2). It will be built out in four phases delivering 12MW of customer available power when fully built. The first phase of ZUR2 is scheduled to be completed in the first quarter of 2020.
Despite the high costs of construction, we anticipate data sovereignty laws and the general business demand for increased cloud service provision will result in hot market conditions throughout 2020 and into 2021.
Poland is the eighth largest economy in the European Union and the largest among the former Eastern Bloc members of the European Union. Many businesses use Poland as their base location to service Eastern Europe. The capital city Warsaw is a popular regional headquarters location for large multinational corporations.
Data centre specific, Poland is the second largest market – after Russia – in Central and Eastern Europe, according to the findings of PMR Research. It is seen as a market undergoing a technology and industry evolution, with dynamic growth in high-end business services, research and development, financial technology and IT.
Cloud computing is one of the fastest growing segments of the IT market in Poland. The segment reportedly generated over $250m of revenue in 2018. This growth in cloud computing helps attract investment from both colocation providers, and those specifically targeting the edge data centre market.
There has been visibly increased interest in Poland as a data centre location in the past 12 months, although construction activity remains cold in comparison to other European markets.
Equinix has announced a €34m investment in Warsaw, due to open in Q1 2020. The new WA3 International Business Exchange (IBX) facility is its third IBX in the capital and will offer both colocation as well as interconnection services to the area. It’s expected this will aid further cloud data sovereignty in Poland. EdgeConnex also expanded its EPIX IP traffic exchange node in Warsaw.
In September 2019, Google Cloud shared its strategic partnership with Poland’s Domestic Cloud Provider (DCP), confirming it would open a Google Cloud region in Warsaw. They would also operate an R&D engineering centre in Warsaw employing specialists to support global cloud computing solutions. DCP is a joint venture between PKO Bank Polski and the Polish Development Fund.
Atman is Poland’s largest local colocation provider, with 13,600 square metres of white space under management and 42MW of total power capacity. At the end of 2018 it announced its partnership with American critical infrastructure specialist Vertiv to launch an IT testing laboratory in Warsaw.
With major businesses such as Equinix and Google investing in Poland, it is likely 2020 will see other data centre owners and developers following their lead.
Sweden is an energy-efficient hub which contributes significantly to the environmental agenda in reducing data centre energy consumption and keeping the supply green.
Stockholm is targeting being a carbon-neutral city by 2040 with more than half of the energy in Sweden generated through renewable sources.
Low electricity costs, a highly educated workforce, and ease of doing business make Stockholm an attractive hub for tech giants and colocation development.
Data centre construction market conditions in Stockholm are considered warm but heating.
Colocation providers continue to expand their footprint. Interxion was completing its expansion of STO5 during 2019, and will now begin construction of its STO6 data centre campus, investing €21m in the first phase scheduled to open in Q2 2020. Equinix also announced a 2019 expansion of its existing IBX data centre in Stockholm.
Google is widely reported to have plots of land in the Stockholm area, but no immediate construction plans have been announced. AWS announced the launch of its own region during the year and appears to have continued expansion plans, with a commitment to buying the energy from a 91MW wind farm in Bäckhammar.
Advania Data Centers (ADC) and Stockholm Exergi have announced they will partner to construct a new data centre facility in Stockholm. ADC has reported that the heat generated by computing equipment in the data centre will be used for local house-heating in Stockholm.
Further afield, the Facebook data centre expansion at its major Lulea campus continues. Microsoft commenced construction this year in Staffanstorp, the site being the third investment it has made in Sweden in the last year, following purchases in Gävle and Sandviken.
Microsoft also announced a deal with Vattenfall to ensure all electricity that powers its Swedish data centres comes from renewable sources. The designs for its data centres in Sweden are among the most sustainable in the world, with the ultimate ambition for them to be zero-carbon operated.
Continued hyperscale investment is expected during the year ahead. Construction delivery capacity is likely to come under pressure as international contractors with the required experience to deliver hyperscale facilities may struggle to adequately service the growing Nordic market.
Denmark is a frontrunner within the green energy transition with a large share of renewable energy in the system, high security of supply and a great focus on energy efficiency and research and innovation.
The strong fibre connectivity to Central Europe and the US have also helped make Denmark a more popular destination for hyperscale and colocation investments, particularly in the past 24 months. The government's work towards a climate-neutral society by 2050 is expected to continue influencing the design of data centres, with a focus on future-proofing. This is already supported by decisions within the 2018 Energy Agreement to reduce the electrical heating tax by .152 DKK/kWh (2018 prices), effective from 2021.
The Danish construction market is small, reporting only 2% GDP growth in 2019. The local market is dominated by a wide range of public projects carried out by consortiums of large and mid-range contractors. To date, data centre owners typically utilise larger main contractors and MEP contractors from outside the country.
Apple and Facebook were the first to bring hyperscale development to Denmark, both with active construction in 2018 and 2019. At the end of 2018 Google announced its renewables-focused Frederica campus, with works expected to continue into 2021, adding to the already hot construction market conditions.
Copenhagen remains home to the majority of colocation data centres in the country. Interxion continued its investment in the region by signing an agreement with subsea fibre-optic networks firm Aqua Comms, to enable interconnection to the America Europe Connect-2 (AEC-2) subsea cable system from its data centre in Copenhagen. Nordic data centre service provider DigiPlex may also continue its investment in Denmark with the construction of its Copenhagen facility reportedly to be followed by a potential new location in Høje-Taastrup.
Facebook has reportedly decided against development of a hyperscale data centre in the seaport town of Esbjerg, Southern Denmark after extensive research. However, the Norwegian digital infrastructure provider Bulk Infrastructure broke ground on its facility in the same region, and is expected to complete construction this year.
With investment continuing in other hyperscale campuses in the market during 2020, we expect market conditions to remain hot.
The UAE has long recognised the importance of the diversification of its economy, with tourism being the key focus to date. The further diversification of sectors is set to mitigate the impact of reduced oil prices and a weakened global demand for trade in the area, assuring sustainable growth to the region over the coming years.
In 2013, His Highness Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the United Arab Emirates, and ruler of the emirate of Dubai, announced the launch of the Dubai Smart City project. This was a commitment to transform Dubai into one of the world's smartest cities in a bid to create “the happiest city on Earth”.
Additionally, the emirate of Abu Dhabi launched its five-year plan in 2018 to develop smart cities and artificial intelligence through the management of IT infrastructure and IoT.
The data centre construction market in the UAE has remained warm, but continues to show potential growth.
Microsoft has launched two cloud regions in the UAE – one in Abu Dhabi and the other in Dubai – which are the first of its cloud locations in the Middle East.
Oracle is planning on opening a new data centre in Dubai following the first of its Middle Eastern data centres going live in Abu Dhabi earlier this year.
Chinese multinational Huawei continues with its interests in the Middle East, announcing a collaboration with telecom provider Etisalat to develop pre-fabricated modular data centres across the UAE. Etisalat is known to be building two new data centres. The Al Ain campus will house 4MW of overall IT power and the Jebel Ali campus will be the biggest data centre in the UAE with an initial capacity of 12.4MW. Al Ain was set to go live in Q3 this year with Jebel Ali expected to be online in Q3 2020.
Both the government and individual agencies in the region have taken up the target of accelerated digitalisation in the region with upcoming smart cities and the Expo 2020 to consider. This, teamed with the rapid adoption of next generation mobile cellular wireless and the industrial use of IoT, has increased the take up of colocation space.
Regional businesses are also increasingly demanding cloud services as this is a more cost effective solution. The challenge the region faces is to support the digital sector when faced with a severe skills shortage.
The total GDP of South Africa is over US$315bn and the nation is home to over 50m citizens, with reported internet literacy now at 55% and growing fast. South Africa is the 23rd globally ranked country on Cloudscene based on data centre density.
As such, South Africa’s data centre industry is thriving, with Johannesburg its single largest market by some margin – twice the size of Cape Town. 2019 has seen an increase in market size in both Cape Town and Johannesburg.
With several submarine cables interconnecting South Africa to Asia and Europe, Johannesburg has up to 52 internet users per 100 people, and the connectivity ecosystem is made up of 60 colocation data centres, 319 cloud service providers and six network fabrics.
The data centre construction market in both Johannesburg and Cape Town are hot with key projects coming to fruition and hyperscale investments increasing, with the country seen as a stepping stone into the rest of the African continent.
Microsoft opened two South African data centres (in Cape Town and Johannesburg) in 2019. There is more demand from Microsoft with a further two data centres being developed for 2020.
In May this year, AWS launched infrastructure points of presence in Cape Town and Johannesburg, bringing Amazon CloudFront, Amazon Route 53, AWS Shield and AWS WAF services to the continent.
Africa Data Centres is currently committed to rolling out 14MW of white space in South Africa, which will be completed in 2020 and 2021. Africa Data Centres also plans to develop a further 20MW in Johannesburg alone.
Teraco Data Environments remains Africa’s largest data centre operator, however there is significant competition within the market. Dimension data is currently developing a large data centre (20MW) for a hyperscale client from Europe, which is due for completion in 2020.
Huawei has a significant footprint in South Africa and the rest of Africa. It is active in the market as an integrator and is providing facilities for local telecoms company MTN.
General construction spending has continued to suffer in 2019 due to negative investor sentiment and slow economic growth. But regardless of this, the data centre market remains strong and is showing continuing improvement even in a slow construction market overall.
Kenya’s mobile industry is among the most developed mobile ecosystems in Sub-Saharan Africa. It is estimated that at least 96% of the Kenyan population is covered by a mobile network.
The government has encouraged centralisation of data centres and co-hosting of data to free capital and operational expenditure for innovation and investments. Currently, there are six colocation data centres in Kenya - five in the capital Nairobi and one in Mombasa.
In the recent past there has also been a great push for data hosting companies to put in place security measures to protect data and the privacy of clients. On 8 November 2019, Kenya's president signed into law the Data Protection Bill 2019, which sets out the requirements for the protection of personal data processed by both public and private entities. The signing of the bill will spur further local investment in data centres as it requires any institution handling or processing Kenyan data to keep a copy of the data locally.
The data centre design and construction industry in Kenya is maturing and now considered to be experiencing warm market conditions.
The MBA1 data centre in Mombasa is run by Kenyan company icolo.io, which is also currently constructing a second data centre in Nairobi, set to open in late 2019 or early 2020.
IXAfrica, founded by a team with combined experience from IXEurope, Equinix, Interxion, Digital Realty, Teraco and IXcellerate, is in the process of setting up a 20MW Tier 3+ data centre that uses environmentally friendly technologies to deliver a target PUE of below 1.3.
The government of Kenya is also investing heavily in technology and data with its flagship smart city Konza City. Huawei has been selected to develop the Konza Data Centre that is to be Uptime Tier 3-certified and which is targeting a sustainability rating under LEED certification, in a $175m investment.
Nairobi and Kenya in general continue to attract investments from the likes of Microsoft, Google and Facebook. Joined most recently by Amazon, who in November 2019 announced the launch of Amazon CloudFront in Kenya.
We expect the data centre sector to continue to grow year-on-year in Kenya, as more content is moved onto online platforms and people demand digital access and safe storage while at the same time providing interdependence between different services.