Global investment in data centres more than doubled in 2021

The record-breaking demand for data centres is fuelled by the rapid expansion of hyperscalers, such as Facebook, Google and Microsoft.

Worldwide investment in data centres has more than doubled in 2021 to $59.5bn (€56.7bn), according to research from global law firm DLA Piper.

The number of global data centre transactions in 2021 stood at 117, up 64% from the previous year. There is expected to be a similar increase in the level of investment this year.

For the current year to 7 June 2022, there have been 41 transactions, worth $21.3 bn (€20.3bn). This level of investment marks an increase of 100% compared to the same period last year. 

The record-breaking demand for data centres is fuelled by the rapid expansion of hyperscalers, such as Facebook, Google and Microsoft. Such companies have benefitted from the transition to cloud service and storage, which has been accelerated by the pandemic.

China, India and the United States are among the countries expected to receive the highest levels of investment in data centres over the next 24 months.

The Asia-Pacific (APAC) region is expected to be the biggest source of data centre investment in the future. Almost four out of five survey respondents chose China as one of the top three countries they expect to see the biggest growth in investment over the next 24 months.

The move towards investment in APAC is led by the rise of Chinese hyperscalers, such as Alibaba, Tencent and  ByteDance.

The level of energy security is a key factor impacting where data centres are located. Global energy concerns and rapidly increasing gas and electricity prices have had a significant impact on data centre operating costs. A survey by DLA Piper found that 90% of equity investors, 89% of developers, and 85% of debt providers would pay a premium to invest in a site with a good and cost-effective power supply. 

William Marshall, energy practice legal director, at DLA Piper in Ireland, said: “Locally in Ireland, operators are aware of the expectations from Minister Eamon Ryan that data centres will have to fit into Ireland’s climate targets. 

"Data centres are energy-intensive and the question around security of supply, availability of materials and rising energy prices are all key considerations in the decision process of where and how data centres are developed. 

"Grid constraints and related policy are also significant issues for any Irish project to examine. An energy-efficient data centre is attractive and if the energy used is also renewable then it becomes an even more compelling proposition from an ESG perspective.”