The cost of building new data centres in EMEA continues to climb, driven by both cyclical pressures and deeper structural shifts. Labour shortages, particularly in specialist trades such as electrical and mechanical engineering, are driving up wages. Meanwhile, inflation in core materials, such as steel, copper, and concrete, remains high. Sustainability requirements are also adding cost and complexity, from the use of low-carbon materials to the integration of advanced cooling technologies.

Although global supply chain conditions have improved since the peak of disruption in 2021–22, bottlenecks persist due to new US tariffs, adding renewed pressure on data centre development timelines and budgets. Lead times for essential equipment, such as transformers, chillers, and generators, remain well above pre-pandemic levels. This is especially problematic in the FLAP-D markets, where energy grid constraints further delay project delivery and inflate costs. According to Turner & Townsend’s 2024 survey, nearly 80% of respondents report delays in equipment manufacturing or delivery. The impact of delays is disproportionately felt by new entrants in the sector, while hyperscalers and large established market players with deeper pockets can secure production slots years in advance.

With construction timelines lengthening, capital expenditure is also rising. Greenfield construction costs have risen sharply, reflecting labour shortages, land scarcity, and persistent supply chain issues. Globally, average costs increased by over 6% YoY. In EMEA, the rise was even steeper, with a 9.7% YoY increase to $9.9 per watt, according to Turner & Townsend. Zurich remains Europe’s most expensive market at $13.3/W, followed by London, Stockholm, and Copenhagen (each at $11.2/W), and Frankfurt at $10.8/W.

Across the region, data centre build costs now range between $7.3 million and $13.3 million per megawatt of commissioned IT load, covering land, shell, electrical and mechanical systems, cooling, fire safety, and fit-out. Markets with the sharpest annual cost increases include Vienna (+27.5%), Warsaw (+25.4%), Stockholm (+18.0%), and Copenhagen (+17.0%). According to Turner & Townsend’s survey, respondents reported a 5–15% increase in the past year, with 22% experiencing even higher increases. While most expect costs to keep rising by 5–15% over the coming year, a third anticipate some deceleration.

Construction costs vary significantly depending on power density, scale, and system redundancy. High-density environments require greater cooling capacity. Redundant systems (N+1, 2N, etc.) also drive up costs significantly; a Tier IV facility can cost 25-40% more than a Tier III and nearly double that of a Tier II, according to Dgtl Infra. However, scale brings efficiency. Large developers benefit from purchasing power, especially in securing electrical and HVAC systems. QTS Realty Trust, for example, has reported savings of 10–15% by repurposing existing buildings through brownfield developments.

In response to persistent cost pressures and supply chain delays, developers are turning to modular construction, expanding into secondary markets, and incurring higher capital outlays to meet ESG requirements. However, grid bottlenecks and the need for high-density compute facilities, particularly in light of rising AI demand, continue to drive costs upward.

Developers are responding with forward purchasing and closer ties with suppliers. Some are pivoting to emerging markets offering more accessible land and power. However, expanding into new territories brings added operational risks and higher upfront costs due to less mature local ecosystems. Emerging markets often face higher-than-expected costs due to limited supply chain depth, lack of local expertise, and greater reliance on imported materials and labour. Nevertheless, areas with established life sciences or high-tech manufacturing clusters may offer smoother transitions due to transferable skills and supplier networks.

Looking ahead, grid bottlenecks and the widespread design revisions which are underway across the industry to accommodate liquid cooling and other advanced technologies necessary for AI and high-density computing will continue to add further upward pressure on construction costs.

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