The latest global research by law firm DLA Piper shows that total investment in data center infrastructure worldwide has increased from $24.4 billion in 2020 to $53.8 billion in 2021.
The report, Data Center Investment Outlook, also finds that the total number of data center transactions increased by 64% over the same period, from 69 in 2020 to 113 in 202.
The company says the record-breaking demand for data centers has been driven by the growth of hyperscalers, such as Facebook, Google, and Microsoft, which have performed well during the transition to cloud service.
It says it has escalated by the pandemic. This growth is expected to continue, with 45% of developers, 56% of debt lenders, and 67% of equity investors planning to invest in four or more over the coming period. more data center projects. 24 months.
DLA Piper says that’s an increase of 10%, 27%, and 37%, respectively, having invested in four or more data centers in the past 24 months.
The report also found that while data center investments primarily focus on the United States and Europe, the APAC region is expected to be the largest source of future growth. Despite 70% of respondents believing that US data center assets are overvalued, the country accounts for nearly half of the global hyperscale capacity. It has the largest pipeline of data center projects.
However, 79% of respondents chose China as one of the three countries they expect to see the greatest growth in investment over the next 24 months, followed by India (56%) and the US (54%). DLA Piper says this shift to investment in APAC can be attributed to the rise of Chinese hyperscalers, including Alibaba, Tencent, and ByteDance.
DLA Piper says 90% of equity investors, 89% of developers, and 85% of debt providers would pay a premium to invest in a site with g, ood and cost-effective power.
Global gas and electricity prices have soared over the past 12 months, significantly impacting data center operating costs. By region, senior executives in APAC are the most likely to pay a premium for energy security at 98%, compared to 82% in Europe and 80% in the US.
The report suggests that APAC’s willingness to pay a premium for energy security may stem from power outages in China and India in the second half of 2021.
ESG is another important area for investments. According to the report, nearly all senior executives (94%) say audit and due diligence on ESG issues has increased over the past 24 months, so much so that 75% of lenders, equity investors, and 70% of developers would pay a premium to invest in a site with very good to excellent ESG credentials.
However, the level of commitment to ESG differs between regions. For example, the survey found that 84% of people in Europe and 80% in the US are willing to pay a premium for a site with good to excellent ESG credentials. For APAC, that’s just 56%.
DLA Piays the increased importance of ESG in Europe and North America reflects regulatory requirements and industry-led initiatives such as the Climate Neutral Data Center Pact, launched in January 2021. The agreement set a goal to achieve climate neutrality. European data center industry Carolyn Bigg, the company’s partner and global co-chair of data protection, privacy, and security practices, says this report reveals record-breaking investments in data centers fueled by the growth of hyperscalers and the transition to cloud services accelerated by the pandemic.
“While there is no clear end to this question, data centers are energy-intensive concerns, and so rising energy prices and the issue of security of supply are playing an increasing role in the decision process about where and how centers will be developed,” she says.
“A low-energy data center is attractive to customers and easier to commercialize. If energy is also renewable, it becomes an even more attractive proposition from an ESG perspective, especially for senior executives in Europe and North America.”
DLA Piper’s partner and co-chair of the global real estate sector Susheela Rivers says there are different attitudes to ESG considerations between Europe and the US, with their stricter environmental regulations and industry-led initiatives, compared to the Asia-Pacific region.
“However, this has come with increased interest in expanding into China and India, where environmental standards enforcement and control are less stringent,” she says.
“It will be interesting to see if a geographic shift changes the industry’s attitude to how data centers are changed.”
