The outlook for the EMEA data centre market points to another phase of rapid transformation, driven by accelerating digitalisation, surging AI adoption, and mounting infrastructure challenges. While the sector continues to attract extraordinary levels of capital and occupier demand, its future growth trajectory will increasingly hinge on power availability, sustainability, and technological adaptability.

AI has become the defining force shaping the industry’s direction. Europe’s AI market is forecast to reach €52.9 billion in 2025 and more than quadruple to €215.9 billion by 2031, according to Statista, expanding at a compound annual rate of over 26%. This momentum will generate unprecedented requirements for compute power, connectivity, and storage, reinforcing the strategic importance of data centre infrastructure. As global technology companies diversify their geographic footprints amid rising geopolitical uncertainty, Europe’s regulatory stability and rule-based environment could make it an increasingly attractive destination for long-term investment.

While AI is driving much of the current momentum, cloud services remain a key catalyst for data centre demand, with many enterprises across EMEA still in the early stages of cloud migration. Given this broader foundation, even as recent concerns emerge about a speculative “AI bubble” and the sustainability of current investment levels, the potential impact on Europe’s data centre sector is likely to be limited. Demand is not solely tied to AI but continues to be supported by structural drivers such as cloud computing, digital transformation. Additionally, efforts by both the EU and national governments to strengthen technological infrastructure and data sovereignty to reduce the current over-reliance on the US should further drive demand. Hence, even if AI investment were to cool, these underlying forces would continue to drive long-term capacity requirements.

Demand for capacity is expected to remain exceptionally strong as AI, machine learning, and cloud services converge to reshape digital ecosystems. Enterprises are adopting more sophisticated hybrid strategies that blend public cloud, private infrastructure, and colocation models. While hyperscalers will continue to dominate, sustained growth in enterprise workloads is expected to support robust take-up across established hubs, particularly those with secure grid access and competitive energy costs. Simultaneously, the emergence of secondary and tertiary markets, particularly in Southern and Eastern Europe and across the Middle East, signals a gradual decentralisation of activity, supported by access to affordable land and renewable energy sources.

On the supply side, the market is poised for a significant step change in scale. The development pipeline across EMEA has reached record levels, with several giga-scale campuses under construction to meet the compute demands of generative AI. Wholesale colocation is likely to expand further as operators seek faster, capital-efficient deployment models. The growing participation of private equity and infrastructure funds is accelerating innovation, consolidation, and the professionalisation of operations across the region.

Yet, rapid expansion continues to face significant headwinds. The lack of available power will remain the most critical bottleneck, constraining supply in several key hubs and delaying project timelines. Developers will be increasingly adopting adaptive strategies, such as modular builds, brownfield conversions, advanced cooling systems, and on-site renewable energy generation, to mitigate these risks and maintain delivery momentum. However, we expect Construction and operational costs to remain elevated, driven by inflation, material shortages, and stringent sustainability obligations.

Investment appetite, meanwhile, shows no signs of easing. Data centres have firmly established themselves as a core infrastructure asset class, underpinned by resilient income streams and high utilisation rates. Capital deployment from private equity, real estate funds, and institutional investors is expected to remain substantial, sustaining elevated levels of M&A activity as the sector continues to consolidate and scale.

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