European Union: European Data Centre Investment Outlook: Opportunities And Risks In The Months Ahead

Last Updated: 10 December 2019
Article by DLA Piper


European data centres had a milestone year in 2018 for investment, with the value of transactions reaching a new high. Figures for the first half of 2019 suggest that another record year could be in sight.

What makes data centres so alluring to investors? Strong fundamentals help. While data centre investment involves some risks not present in other types of infrastructure assets (contracts are shorter than other types of infrastructure and the relative speed at which they can be constructed means there is lower barrier to entry for competitors), demand for big data, cloud computing, artificial intelligence and the Internet of Things is rising. These technologies drive demand for services and, by extension, the buildings and equipment that make them possible.

While the broad attractions are clear, this study reveals significant divergence between debt providers and equity investors in terms of investment behaviour. For example, the study highlights big differences in appetite for greenfield versus brownfield assets. It also shows that debt providers expect to be more active than equity investors over the next two years – though that is to be expected, as debt providers have the opportunity to work on refinancings. Additionally, the findings reveal a marked difference in outlook between the two groups over the stability of long-term revenue.

In the following pages, we examine these and other questions and consider what underlying dynamics might be at work.


  1. 92% of respondents expect the overall value of investment going into Europe's data centre infrastructure to increase over the next 24 months compared with the previous 24 months.
  2. Debt provider respondents state a combined increase of 33% in the total value of debt investment they expect to allocate to European data centres over the next 24 months compared to what they allocated over the previous 24 months.
  3. 100% of respondents agree that Brexit uncertainty has negatively impacted the data centre infrastructure market in the UK and Europe since June 2016, with 56% of equity investors going as far as to say that the negative impact has been significant.
  4. Even for data centres with overall inferior technology (i.e. assets with low energy efficiency and poor environmental performance), two-thirds of all respondents expect average rent charges will either only decrease by up to 4% or remain unchanged by the end of 2019.
  5. 100% of respondents are expecting rent charges to increase for data centres with overall superior technology, with over a third expecting the increase to be 10% or more.


Investment in data centres is set to scale new heights.

Figures from the Inframation Group show that European data centre transactions have risen dramatically since 2015, both in volume and value. Momentum is building: deals in 2018 exceeded EUR1.2 billion and 2019 could break previous records (Chart 1 – European data centre transactions).

Drivers: Cloud and colocation

Two factors are driving growth. First is the shift to cloud computing, where data storage and software are hosted remotely in data centres and paid for as-a-service. From the Internet of Things to analytics, businesses racing to build new digital capabilities are tapping into the cloud to achieve their goals.

The second factor is colocation, or colo. This is about providing businesses with high-tech buildings to house their IT infrastructure. This matters because companies' existing real estate is not always suitable. A colocation facility typically offers power, cooling, connectivity and physical security. Customers provide their own hardware and software.

Cloud and colocation are transforming the way businesses consume IT. "Companies are looking to close onsite data centres to opt for outsourced units so they can better manage their resources," says the MD of a Netherlands-based financial institution. "This indicates that the number of data centres in Europe will increase, along with upgrades to infrastructure at current sites," the MD adds.

Fundamental attractions

High-value assets are part of the appeal. "You have buildings and equipment, so you can secure against the asset," says Anthony Day, partner, DLA Piper. "You also have a sticky revenue stream, because data centre migration is a headache," he adds.

All of this is helping to attract new investors – infrastructure funds among them. "People are looking for more creative infrastructure to invest in. Data centres fit that quite well," says Mike Conradi, partner, DLA Piper.

Nearly all respondents (92%) expect the overall value of investment (including debt investment) that will go into European data centre projects to increase over the next 24 months compared with the previous 24 months. A majority expect the increase to be between 10% and 29% (Chart 2).

Debt providers lead the charge

The survey reveals big differences between debt providers and equity investors in outlook. Debt providers are signalling an increasingly active role in the market and they predict big increases in the overall value of their investments, while equity investors' expectations are rather more muted.

Looking first at the outlook for value, debt providers expect to see a combined increase of 33% in the total value of debt investment they will allocate to data centres over the next 24 months compared to the previous 24 months (Chart 3). Equity investors, on the other hand, expect a more modest increase of 18%.

Volume expectations are similarly divergent. A larger proportion of debt provider respondents (36%) say they expect to finance four or more European data projects over the next 24 months than those who say they financed this number of projects in the previous 24 months (28%) (Charts 4 and 5).

Equity investors, on the other hand, expect to ease back on the number of European data centres they invest in overall. Nearly two-thirds (64%) say they had invested in more than one data centre in the past 24 months, but only 52% expect to do the same over the next 24 months. Furthermore, one in five equity investors say they do not expect to invest in another Europe-based data centre over the next 24 months at all.

At the level of individual organisations, the proportion of debt players planning to invest EUR500 million or more is expected to more than double to 37% over the next two years compared with the past 24 months. By contrast, only 10% of equity investor respondents expect to invest EUR500 million or more over the next two years – the same as for the last 24 months.

There are a number of possible reasons why debt providers expect to be more active than equity investors. Most projects are refinanced after a few years, giving debt providers more opportunities for deal activity. Moreover, the dearth of investment options elsewhere in the market is another factor. "Debt providers in particular have been suffering for a long time with very low returns," Conradi points out. "The figures suggest that they are starting to look at alternatives to a greater extent than equity investors," he adds.

Read the Report

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions