AI has become the most powerful engine of growth for the EMEA data centre market. IDC projects that AI spending in Europe will rise to $144.6 billion by 2028, reflecting a compound annual growth rate (CAGR) of 30.3% between 2024 and 2028. The scale of computational power required to train and deploy large language models and other AI applications has placed unprecedented pressure on digital infrastructure across the region.

Public cloud adoption, once the main driver of expansion, is currently experiencing slower momentum. Some enterprises have begun to repatriate workloads to their own facilities in response to escalating costs. Nevertheless, the movement of workloads from public cloud environments has not materially reduced overall cloud usage. Instead, most enterprises are adopting hybrid IT strategies, combining several public clouds with on-premises data centres. Cloud services, therefore, remain a major catalyst for data centre demand. Indeed, many enterprises across EMEA have yet to reach an advanced stage of cloud migration, particularly in non-Western markets, where adoption rates are still comparatively modest. As a result, requirements for both cloud and AI are increasingly converging, often within the same infrastructure.

Geographically, demand remains highly concentrated. Despite discussions around location-agnostic strategies, very few such projects have translated into transactions. Operators are doubling down on existing availability zones, reinforcing consolidation in areas with established hyperscaler footprints, reliable energy supply, and space for scalable growth. While demand is gradually expanding beyond the traditional European hubs, the bulk of requirements continues to cluster in the FLAP-D markets (Frankfurt, London, Amsterdam, Paris, and Dublin), supported by dense populations and the presence of large corporate occupiers. IDC expects financial services to lead AI investment, which is likely to anchor demand in financial clusters over the next three years. Government incentives are further influencing site selection, particularly for facilities that can accommodate both AI and cloud deployments through hybrid solutions.

Measured activity highlights these structural dynamics. Live capacity expanded by 12% over the past 12 months, with exceptional growth recorded in Portugal (60%), Saudi Arabia (49%), Spain (25%), the UAE (20%), and Sweden (17%). Established hubs also grew strongly, with France up 15%, Germany 10%, the UK and Ireland 9%, while the Netherlands saw only 6% growth, constrained by the government moratorium on new developments. Yet, only 850 MW of power capacity has been delivered since the start of the year, an 11% decline compared to the same period last year, underscoring persistent supply constraints and extended delivery timelines.

At the same time, new take-up reached 845 MW, around half the power capacity leased during the same period last year. This slowdown does not signal weaker occupier appetite but rather reflects the limited availability of new facilities coming to market. The underlying strength of demand is reflected in the total contracted power capacity, which has risen to nearly 14,500 MW, up 12% year on year (YoY), with roughly one-fourth of take-up now pre-let compared with less than 20% three years ago. The strongest annual growth was recorded in Nigeria (69%), Greece (48%), Norway (47%), Portugal (38%), and Saudi Arabia (32%), largely driven by an increasing number of recently completed or pipeline facilities.

Consequently, occupancy rates across the region climbed to 91% in Q3 2025, up from 87% in Q3 2022, illustrating that demand continues to outpace supply. The UK, Germany, Ireland, the Netherlands, and France remain the dominant markets, together accounting for 54% of leased capacity by mid-2025, a slight decline from 58% in 2022, primarily due to constrained supply in the Netherlands.

This persistent imbalance between surging demand and restricted supply continues to underpin rental values. Following three years of sharp increases, average rents have stabilised across the region. Nonetheless, with accelerating AI-related requirements, rising energy costs, and sustained construction inflation, further upward pressure on pricing is widely anticipated in 2025.

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