Western Europe Data Center Construction Market Outlook 2023-2028: Rising Colocation Data Center Investments, Increase in Sustainable Initiatives, Growing Adoption of Artificial Intelligence

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May 26, 2023, 12:45 ET

DUBLIN, May 26, 2023 /PRNewswire/ -- The "Western Europe Data Center Construction Market - Industry Outlook & Forecast 2023-2028" report has been added to ResearchAndMarkets.com's offering.

The Western Europe data center construction market is expected to reach a value of $10.61 billion by 2028 from $8.22 billion in 2022, growing at a CAGR of 4.33% during 2022 to 2028

There is a high demand from organizations for retail colocation services in developing countries. Enterprises having limited budgets and demanding geographical distribution capacities will drive the demand for retail colocation services. There is an increasing demand for computing power from cloud providers, enterprises, IoT, and Big Data organizations, which will drive wholesale colocation demand.

Germany leads the Western Europe data center market with an overall investment of over USD 1.8 billion in 2022. The country's cumulative growth is expected to be more than USD 12 billion during the forecast period. The growth in data center development has led the contractors to implement new sustainable methods, increasing the competition among them. Operators opt for these contractors to enhance their green credentials.

There is significant growth in greenfield and modular data center developments. The modular data center developments are increased as the construction methods are seemed inefficient due to labor shortages, budget constraints, and construction delays in certain countries across the region. The increased demand for modular solutions from data center operators is increasing the revenue of modular data center solutions providers such as Vertiv, Dell, and HPE, among others.

The power capacity is expected to grow significantly in the region with the advent of colocation and hyperscale operators investing highly in the market. There is a trend of procuring energy harnessed from renewable power sources by colocation, hyperscale, and colocation service providers.

KEY TRENDS & DRIVERS

Growing Adoption of Artificial Intelligence

The adoption of artificial intelligence is fueling data generation and the technology market, thereby increasing the need for data center construction. Eurostat released a report according to which Ireland ranks at the top in Europe in using AI/ML technologies by businesses and enterprises in their infrastructure or applications.

Several AI initiatives in countries across the region include global partnerships on artificial intelligence, a mission on artificial intelligence, a national strategy on artificial intelligence, and others. For instance, The Government of France invested around USD 1.7 billion in its National Strategy for Artificial Intelligence.

The high adoption of AI/ML solutions is prompting the installation of a highly efficient cooling infrastructure. Liquid cooling is the prominent technology for supporting AI/ML workloads in High-Performance Computing (HPC). Direct-to-chip and liquid-immersion cooling markets, through OEM, are making strong bonds.

Research & Development centers are being set up for innovations in AI and other applications across various Western European countries. For instance, R&D centers for AI have been set up by companies such as Google, Oracle, and Huawei.

Increase in Sustainable Initiatives

Data centers, the major sources of carbon emissions worldwide, are looking for sustainable initiatives to reduce the high quantity of CO2 emissions generated by the facilities. According to the Europe Climate act, a part of the European Green Deal, countries across the continent are aiming to achieve net zero carbon emissions by the year 2050.

Various operators in Western Europe are a part of the Climate Neutral Data Center Pact act, such as Interxion (Digital Realty), Aruba, OVHcloud, Equinix, and Scaleway data center, among 17 industry associations. The pact states that the facilities part of it must be powered completely using energy harnessed from renewable energy sources such as wind, hydro, solar, and others by 2030. The Government of the UK aims to achieve 100% renewable energy in its energy mix by 2035.

Rising Colocation Data Center Investments

The Western Europe data center construction market has shown signs of growth with the development of hyperscale data centers by cloud service providers such as Microsoft, IBM, Amazon Web Services (AWS), Oracle, Google, and Tencent. The prominent investors in the Western Europe data center construction include Equinix, Interxion (Digital Realty), NTT Global Centers, Echelon Data Centres, Iron Mountain, OVHcloud, Vantage Data Centers, and VIRTUS Data Centres.

In August 2022, Proximity Data Centres opened a data center in Buckinghamshire. A loan of USD 30.8 million was granted to the operator for its UK expansion, with a total investment of USD 99 million. OVHcloud, a cloud computing, has planned to invest around USD 101 million by 2027 for its upcoming data center in Limburg.

Telehouse has planned an investment of around USD 988 million for its European expansion. Telehouse plans an investment of around USD 988 million for its expansion in countries across Western Europe and other regions in Europe. An increase in data center investment will provide huge revenue opportunities for construction contractors and colocation and infrastructure providers worth billions of dollars.

COMPETITIVE ANALYSIS

Some of the major vendors operating in the Western Europe data center construction market include Arup, AECOM, Ariatta, Bouygues, ICT facilities, Mercury, Metnor Group, Oakmont Construction, ARC:MC, Kirby Group Engineering, DPR Construction, Turner & Townsend, Gruner, Lupp Group, Max Bogl, Exyte, DBA PRO, Future-tech, ISG, and NORMA.

SEGMENTAL ANALYSIS

Significant investment growth due to the advent of technologies such as cloud computing, Big data & IoT, and M/L Technologies.
Increasing growth in the construction of modular data centers is being observed.
Operators are adopting the turnkey approach for designing new data center facilities.
Greenfield projects will encounter more growth as compared to brownfield.
The brownfield development of data centers will continue to grow along with installing on-site renewable power sources.

Support of The Government For Data Centers

One of the prominent enablers for the Western Europe data center construction market is breaks and tax incentives offered in various countries, which generate significant savings and incorporate other benefits.
The Government of Spain is investing highly in the country's overall digitalization. The government has planned around USD 720 million to strengthen Artificial Intelligence in the country.
The Government of France reduced the electricity taxes and will help attract investments in the country.
The UK government has placed a corporate tax of 20%, the lowest amongst G20 countries.
The Federal Act on Data Protection (FADP) in Switzerland includes a few GDPR adaptations, which will aid in attracting further investments for data centers in the country.
The French Government offers tax incentives for Research & Development up to 30% and has a limit of USD 97.48 million.
The Dutch government is undertaking initiatives to bring the country to the forefront of the Western Europe data center construction market. The sales and VAT rate in the country is over 20%.
The Government of the Netherlands is taking initiatives to increase the country's data center market portfolio and reach. The VAT and sales tax in the country stands above 20%.
Tax incentives are available in most Western European countries. More tax breaks will be concentrated on less developed countries to attract investment in the Western Europe data center construction market.

Market Overview

Data Center Design Certifications

Uptime Institute Tier Standards
Leed Certification
Tia 942 Certification

Market Opportunities & Trends

Higher Adoption of Artificial Intelligence
Increasing Adoption of District Heating Systems
Data Centers Prioritizing Sustainability
Innovations in Data Center Technologies

Market Growth Enablers

Increasing 5G Deployments Fueling Edge Data Centers
Growth in the Adoption of Cloud Services
Increasing Adoption of Big Data & Iot
Support from the Government
Modular Data Center Construction
Growing Submarine & Inland Connectivity
Adoption of Ocp & Hyperscale Infrastructure

Market Restraints

Security Challenges in Data Centers
Carbon Emissions Affecting Data Center Sustainability
Location Constraints on Data Center Development
Lack of Skilled Data Center Professionals

Prominent Support Infrastructure Providers

3M
ABB
Airedale International Air Conditioning
Alfa Laval
Carrier
Caterpillar
Condair
Climaveneta
Cummins
D'HONDT THERMAL SOLUTIONS
Daikin Applied
Delta Electronics
Eaton
ebm-papst
EMICON INNOVATION AND COMFORT
Enrogen
FlaktGroup
Grundfos
Guntner
GESAB
HiRef
HITEC Power Protection
Honeywell International
Johnson Controls
KOHLER-SDMO
KyotoCooling
Legrand
Mitsubishi Electric
Munters
Nlyte Software (Carrier Global Corporation)
Perkins Engines
Piller Power Systems
Riello Elettronica ( Riello UPS)
Rittal
Rolls-Royce
Schneider Electric
Siemens
Socomec
STULZ
Trane (Ingersoll Rand)
Vertiv
ZIEHL-ABEGG

Prominent Construction Contractors

AECOM
AEON Engineering
ARC:MC
APL Data Center
Ariatta
ARSMAGNA
Artelia
Arup
Atkins
Basler & Hofmann
BENTHEM CROUWEL ARCHITECTS
Bouygues Construction
Callaghan Engineering
Cap Ingelec
Collen
Deerns
DPR Construction
Eiffage
EYP MCF
Ferrovial
Future-tech
ICT Facilities
IDOM
ISG
JCA Engineering
JERLAURE
Kirby Group Engineering
Linesight
LPI Group
M+W Group (EXYTE)
Mercury
Metnor Construction
Nicholas Webb Architects (NWA)
NORMA Engineering
Oakmont Construction
PM Group
(PQC) Power Quality Control
Quark
RED
Reid Brewin Architects
Royal HaskoningDHV
Skanska
SPIE UK
Starching
STO Building Group
STS Group
TPF
TTSP
Turner & Townsend
Winthrop Engineering and Contracting

Prominent Data Center Investors

AtlasEdge
Aruba
China Mobile
Colt Data Centre Services (COLT DCS)
CyrusOne
DATA4
Digital Realty
Echelon Data Centres
EdgeConneX (EQT Infrastructure)
Equinix
Euclyde Data Centers
Facebook
Global Switch
Google
Iron Mountain
KDDI
Liberty Global
Microsoft
Nautilus Data Technologies
NDC-GARBE Data Centers Europe
NTT Global Data Centers
Orange Business Services
Proximity Data Centres
Pure Data Centres
T5 Data Centers
Telecom Italia Sparkle
Vantage Data Centers
Virtus Data centers (ST Telemedia Global Data Centres)
Yondr

New Entrants

Global Technical Realty
Stratus DC Management

For more information about this report visit https://www.researchandmarkets.com/r/1q9v2o

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