Given that the global tech giants are primarily headquartered outside Europe, analysing the recent trends in Foreign Direct Investment (FDI) can help to identify which locations are proving attractive for data centre operations. Cushman & Wakefield’s latest findings confirm that the largest investment activity continues in mature tech and financial hubs in Western Europe. A key driver for activity in this group of locations is the proximity to the high economic activity of these increasingly digitised markets, writes Dimitris Vlachopoulos, Partner, Head of Portfolio & Location Strategy, EMEA for Cushman & Wakefield.
Interestingly, Amsterdam is the most attractive location in Europe with data centre investment reaching $9.5 billion during 2016-2021. Meanwhile, the Nordic markets, such as Oslo, Helsinki & Reykjavik also experienced a high volume of investment, driven by access to lower-cost renewable energy and the favourable climate for ‘free’ cooling. These locations are attractive for high-performance computing (HPC), including AI applications, where proximity to city populations is less critical.
From Southern Europe, only Athens makes it to the top 10 list, confirming the recent high activity in the market by Microsoft and AWS. However, Cushman & Wakefield has identified Marseille and key locations on the Iberian Peninsula (Barcelona, Lisbon) as being major focuses for current investment too. Access to global fibre cable is one of the key factors for high data centre activity in this group of markets.
In Central and Eastern Europe (CEE) data centre investment is relatively low, with only Warsaw experiencing high growth, surpassing London to reach the top four destinations in Europe. With CEE hosting the largest shared service centre (SSC) cluster in Europe, driving economic activity and digitisation of services, we expect an increase in demand for data centres in this region.
Traditionally, access to ’space, power, network and cooling’ are amongst key considerations when deciding where to locate data centres. However, Cushman & Wakefield considers this to be oversimplified. We look at over twenty-five different factors. Factors such as speed to market, capital investment, detailed network capacity & latency, power capacity, resiliency and sustainability, local and national government attitudes to data centres, talent availability, are all important.
Further, it is the purpose of each application (or workload) that determines the preferred location, whether that is connecting to an ultra-low latency trading community, hyperscale multi-cloud computing, media streaming, or even bitcoin mining. This FDI overview gives an interesting insight into where smart money is going. And not surprisingly, FDI is dominated by US investment.
