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JLL Reveals Data Centre Market in Southeastern Europe is Set to Grow By Nearly 50%

Real estate consultancy, JLL has published a new report revealing that the Data Centre market in Southeastern Europe has massive growth potential over the next two to three years as countries in the region become increasingly attractive to investors.

This rise in popularity has come as a result of the presence of highly efficient communication networks along the Western Europe-Asia axis and affordable costs for land, energy, construction and labour. Furthermore, the JLL report identifies that secondary markets in Europe, including Spain, Poland, and Romania, are projected to grow by an average of around 49 per cent. Meanwhile, the core FLAPD area (Frankfurt, London, Amsterdam, Paris, Dublin) is forecasted to not exceed 16 per cent.

The same report indicates that markets in Southern Europe are expected to grow between 30 – 55 per cent in the year ahead.

The widespread adoption of artificial intelligence (AI) and cognitive power processes is generating unprecedented demand for data centre capacity. This occurs not only in mature markets in the West but also in secondary or emerging markets, including Romania. The report also highlights those investments in the data centre industry in 2023 doubled compared to the previous year, totalling €2.34billion Europe-wide.

Mihai Manole, CEO of Tema Energy
Mihai Manole, CEO of Tema Energy

”The entire Southern Europe data centre market is booming. Bucharest could potentially triple or even increase its data centre capacity by up to seven or eight times in the next three years, following announcements of new large projects in or around the city by several investors in recent months”, stated Mihai Manole, CEO of Tema Energy and organiser of the DataCenter Forum, the event dedicated to the data centre industry in the region.

Benefits in Bucharest

Bucharest ranks ninth in the EMEA (Europe, Middle East, and Africa) emerging markets. Its data centres total 15 MW of power, according to a 2023 report released by real estate consultancy Knight Frank. However, projects already in development could increase this capacity to at least 50-55 MW in the relatively short term.

Last year, several major players announced their intentions and commenced projects to build large data centres in Bucharest, primarily due to its easy access to communication lines, electricity network, and qualified staff.

Southern Europe Data Center markets are booming

Not only is Bucharest rising in the interest of investors, but the entire Southeastern region of Europe is also boosted by its efficient and reliable connectivity.

Within this evolving landscape, Athens stands out as a promising market, drawing the attention of major players. The Greek capital already possesses the greatest IT capacity in the region, totalling 101 MW. However, the growth potential is enormous, as Microsoft plans to construct three data centres in the greater Athens area to provide cloud computing services in Greece, with a total budget of approximately 976 million euros.

Additionally, the French company DATA4, Digital Realty, and Sparkle, the international ‘arm’ of Telecom Italia, announced plans for new data centres. Greek company Lancom, having invested over 20 million euros to date, has initiated a new investment in Crete for the creation of another data centre, potentially serving as a gateway to the Balkans.

A similar situation is observed in Sofia, where in 2023 Equinix invested more than $12million in the expansion of an existing data centre, doubling the site’s capacity to 700 racks. Moreover, the entire data centre market in Bulgaria is projected to grow by 6.96 per cent from 2024 to 2028, reaching a market volume of $201.70million by 2028.

Similarly, Zagreb will experience consistent growth in the next couple of years. Digital Realty has already announced the expansion of its existing data centre in Zagreb, ZAG1, with an additional 1,600 m2 of ICT and technical space. Furthermore, Digital Realty plans to invest in building a second data centre in Zagreb, also at a hyperscale level, for the future.

Looking to the near future

Most international analysts believe that the dramatic reduction in available data centre space and power in the highly developed data centre countries (UK, France, Netherlands, Germany, Ireland, etc.) will lead more and more investors to turn to secondary markets: Eastern Europe and Scandinavia.

Thus, over the next two years, the main investments will be directed to places where the cost of land, energy and human resources is lower. They will also be where there are efficient communication nodes, sufficient (and green) electricity, and the technical capabilities to build and operate large data centres.

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