Exponential growth in demand is continuing to propel the global data centre market. Alongside long-running pressures on costs and schedules, linked to labour and material supply, our 2023 survey shows that power availability is a growing priority for the sector. As data centres compete to connect to energy grids, newer markets could be set to benefit.
Now in its seventh year, our data centre cost index is the construction industry’s only cost index specified to the data centre sector.
Our 2023 index covers 46 key markets for data centre construction around the world, providing an index ranking and an indicative US Dollar per watt (US$/W) cost for each location.
While the traditionally expensive core data centre markets still top the table – from Japan, Switzerland, Singapore and the US – emerging regions are climbing into the higher ranks for the first time.
Tokyo is now the most expensive market in which to build data centres – jumping three places from fourth in 2022 and overtaking last year’s leader, Zurich.
Jakarta has jumped up from rank 14 to rank seven since 2022, and Kuala Lumpur has jumped six places – demonstrating an acceleration in costs in emerging Asian locations. The Indonesian market is seeing fast growth as the local economy takes off.
Johannesburg has had the biggest jump of any location, increasing eight places – reflecting the impact of increased activity in emerging African markets. Driven in part by investors looking for new opportunities in underserved markets and more economical land capacity, demand for data centre construction in Africa has been on an upwards trajectory for several years.
The Middle East is also an emerging hotspot for data centre construction as the region’s power demands increase to support nation-building programmes. Riyadh in Saudi Arabia has newly entered the index at rank 14.
The rapidly expanding global data centre market is placing greater pressure on electricity grids across the globe. The investment needed to upgrade and reorientate grid capacity in almost all markets is creating backlogs for new connections.
Eighty-one percent of those we surveyed reported ‘severe’ impacts to data centre delivery times due to power connection delays. This is leading to a new shift in priorities for the industry. Ninety-two percent now deem access to power availability as more important than the location of the data centre itself.
Delivery costs in these emerging markets will be elevated because of the ongoing need to mobilise skilled resources from overseas to manage the projects, driving up the overall labour costs. Further investments in local skills and resources continue to be required.
A resounding 83 percent of respondents see data centre demand in their region as increasing rapidly. Appetite for digital capacity also continues to accelerate at both a business and consumer level. These established trends are then being turbo-charged by new technologies – most prominently from artificial intelligence (AI).
Our survey reveals that 88 percent report demand for data centre capacity for AI and machine-learning projects is increasing rapidly. AI is already resulting in higher power density requirements for data centres.
AI will require an exponential rise in computing capacity, pushing yet further demand – and opportunity – in the data centre sector.
Read the full report to access our global data set and insights into the latest trends impacting the data centre construction sector.
To generate the results of our Data centre cost index 2023, data centre benchmarking cost data was captured from more than 200 live or recent projects in more than twenty countries. All costs are converted into US Dollars.
To supplement our cost data, we also conducted an online poll of experts working across the data centre industry.
Please contact Data Centre Cost Index Lead, Rebecca Best to discuss our research in more detail.