With the increasing prevalence of smart devices and the digitisation of the business environment, the data centre market in Latin America is expected to grow at a compound annual growth rate of over six percent during the period 2019-2025 (Research&Markets).
Brazil is the largest economy in Latin America and the largest market for data centres. In Sao Paulo, the demand for colocation data centres is on the rise and there has been an expansion in hyperscale facilities, meaning the market is now showing signs of maturity.
The city and its surrounding metropolitan region are well provided with infrastructure, making it one of the few cities in Brazil, alongside Rio de Janeiro and Fortaleza, in which major data centre investments are being made.
The Argentinian economy is expected to contract around 12 percent amid the coronavirus pandemic. Despite this economic volatility, Buenos Aires and its surrounding areas have remained popular with colocation service providers. The city has a population of 14 million, low natural disaster risks, well-serviced infrastructure support and a well-educated work force, all contributing to the long term attractiveness of this market for data centres.
The market in Chile has also been affected by the pandemic, however, data centre construction has largely continued unabated. Existing schemes have continued to be delivered and new schemes are also coming to market, including Oracle’s new facility due to be in operation by the end of 2020 and a new colocation facility from Odata.
Equinix – as a result of its hyperscale joint venture with GIC forming xScale – is investing in three data centres across Latin America, two of which will be located in São Paulo. AWS and Oracle will invest BRL 1bn in each facility in Sao Paulo, and OData expects to invest approximately BRL 250m in additional capacity.
In Buenos Aires, data centre construction in 2020 is cooling down from a warm 2019. The market has been generally flat, but there have been some positive signals. Arsat recently announced a fibre construction and data centre modernisation programme.
Hyperscale investors have continued to be active in Santiago in 2020. AWS announced the Edge Location, or Edge Data Centre, (EDC) which is part of its Amazon Cloud Front service, which will allow the delivery of high-speed data service to its customers.
In both Brazil and Argentina, the push for more colocation centres has largely been driven by eEcommerce growth. This will continue to stimulate investors to provide solutions, causing rising demand. Caution may be needed as construction costs have been increasing along with inflation rates.
Some of the major data centre players including Amazon Web Services and Oracle continue to show interest in investing in Argentina, however, there is no set timetable for this. It is anticipated that 2021 will continue to see steady investment from both hyperscale and colocation providers in Chile.
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