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Pandemic driven data reliance fuels record data centre investments

Knight Frank, the global property adviser, has released key findings from its Data Centre Report 2021 which evidences that the data centre market has experienced strong momentum in 2021.

The report, published in partnership with DC Byte, the leading data centre research and analytics platform, shows EMEA markets have seen take-up rise 4% in the last quarter, to 120MW with a 10% increase in new supply overall, totalling more than 180MW. In APAC total supply increased by just under 200MW, reflecting a similar pace to 2020 take up - recorded at just over 800MW - making total supply 5800MW across the region.

The most recent Data Centre Report 2021, which provides comprehensive coverage of 28 key markets, has closely tracked the significant pandemic-driven data usage shift in 2020 of, which in turn magnified the traditional “buy” cycle and led to record developments. This year the data shows it is apparent that whilst some markets have kept up with this pace others, mostly Tier II cities, have reported little supply growth in early 2021.

In EMEA, the core (FLAPD) markets of Amsterdam, Frankfurt, London, Paris and Dublin continued their momentum, yet the trend is towards expansion outside of these markets with Africa poised to become a significant hyperscale region; highlighted by the level of supply coming online in South Africa and Kenya. Istanbul and Warsaw are also noted as “edge” markets to watch. Development in EMEA’s leading markets has been most notable in Q1 in Dublin with 108MW added, which represents 75% of 2020’s new supply. London and Moscow both saw 40MW added, whilst Zurich added 33MW.

In APAC, the total IT MW consumed increased by 5 percent to just over 90MW in the first quarter which is on track to meet the 2020 take up levels of 385MW. Among the top performing markets, Mumbai is expected to match last year’s increase, with 56MW added in Q1 2021. Sydney reached half of last year’s take up in the first quarter alone and has already more than tripled last year’s new supply.

Ed Galvin, Founder and CEO at DC Byte, said: “Our data suggests that the accelerating take-up rates will only continue to rise, quickly absorbing the 2020 supply. This will prompt continued commitments to bring new data centre facilities online in 2022 and beyond, further reflected by new developments that have already been committed to. The sector is extremely fast moving and the level of competition to source new sites is increasing exponentially. We have never seen such rising demand for comprehensive intelligence in this space. The pressure on all suppliers - consultants, operators, developers – to have detailed information, almost at their fingertips, reinforces how responsive investors need to be in making fast, well informed, decisions.”

Stephen Beard, Partner and Co-Head of Global Data Centres at Knight Frank, said: “The increase in data centre facilities is becoming more widely distributed, as providers expand into new territories to add political and geographic diversity as well as meeting new data protection legislation requirements. Belgium, Denmark, Spain, Zurich, and Warsaw, for example, have been recent targets for cloud availability zones. Meanwhile, there is industry consolidation to also consider. New investors looking to maximise facility value to serve the 5G data economy, will likely target sites for upgrades rather than decommissioning.”

EMEA SUMMARY

•London: reported 40MW of new supply in Q1 2021

•Dublin: continues to be a leading target with 17 percent share of aggregate supply across EMEA – adding 108MW of new supply in Q1, a significant expansion that is 75 percent of 2020’s new supply.

•Zurich: reported rapid growth, becoming a hyperscale zone for AWS. Adding just over 30MW, compared with 100MW of supply added in total during 2020, in Q1 2021.

•Moscow supply grew by 18 percent, adding 41 additional MW in Q1 2021

•Based on DC Byte analysis of private equity announcements, Africa is expected to receive a disproportionate level of investment in the coming years.

APAC SUMMARY

•Hong Kong: added significantly to capacity in Q1, with 50MW (compared with 80 added in all of 2020) and take-up of 10MW, more than a third of the take-up in all of 2020.

•Kuala Lumpur made gains in 2021. Total capacity expanded by 8MW. This is a third of 2020’s supply increase, bringing the total aggregate supply to 89MW.

•Expansion in other Tier II markets in India, notably Chennai, are gaining attention.


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