As demand outstrips supply

Globally, the data center industry continues to experience historic demand for more capacity, in its bid to support the growth in cloud computing. The shift to the cloud and the rapid adoption of digitalization during the pandemic resulted in a demand-supply gap. Consequently, to fulfill the growing demand, several new projects have been announced by tech giants such as Microsoft and data center providers worldwide.

· Microsoft, for instance, has planning to boost its data center capacity globally over the last few years. From North America to Asia Pacific and Europe, the firm had announced its plan to increase the investment significantly in the development of new data center facilities.

· The Racine County Board of Supervisors, in April 2023, approved the US$1 billion Microsoft data center in Wisconsin. To build the data center, Microsoft is buying 315 acres of land from the local government for US$50 million. As per the terms of the agreement, Microsoft has to commence Phase I construction activities by H1 2026. Phase II construction, on the other hand, has to commence by H1 2033.

Microsoft, in April 2023, also gained permission to set up a data center facility in Hollands Kroon. The site is located in the north of the Netherlands. Google is among the other tech giants that have a data center facility located in Hollands Kroon.

Alongside the Netherlands, other European markets are also experiencing robust investment in data center projects in 2023. Kao Data, for instance, announced that the firm is building a new facility in Manchester. To date, Kao Data has only built data centers in the south of England. The 40MW facility is the first one planned by the firm in the north of the country. The site is due to live in 2025, and thus, construction activities of the facility will keep aiding the growth of the commercial construction market.

Apart from the Netherlands and the United Kingdom, new data center projects have been also announced in Norway and Sweden in H1 2023.

· In Sweden, EcoDataCenter is planning to build a 150MW facility, as announced in April 2023. The data center facility is projected to be built in different phases, with the completion time set for 2026.

· Green Mountain, on the other hand, has announced that the firm is building 90 to 150MW of data center facility for TikTok in Norway. This is the first hyperscale data center construction project of this scale in Norway.

TikTok has announced that its data center, in addition to two upcoming facilities in Dublin, Ireland, are integral components of Project Clover. This initiative aims to securely store European data within the European Union, emphasizing TikTok's commitment to data protection and privacy.

Read More - The string of collapses in the residential and commercial construction sector is led by government policies undertaken during the pandemic outbreak

Read More - Spending on major construction projects to put debt pressure on Chinese provinces in 2023

Investment in data center projects is also growing in the Middle East and Africa region, amid the growing digitalization. Khazna, for instance, announced that the firm plans to build its first data center outside of the United Arab Emirates. As it seeks to expand internationally, the firm announced a new data center facility in Cairo, Egypt in May 2023. Initially, the data center facility will have a capacity of 25MW. However, the firm also has an expansion plan of up to 50MW.

· The construction is expected to begin in H2 2023, with a completion period of three years. To develop the US$250 million data center project, the firm partnered with local firm Benya Group. Going forward, Khazna is also planning to launch new facilities in other regional countries, including Saudi Arabia, Kuwait, and Morocco.

Africa Data Centers, in May 2023, also announced that it was set to begin construction work on a new facility in Ghana. The facility is initially designed for 10MW; however, it can be expanded up to 30MW. The project is partially funded by the International Development Finance Corporation (DFC).

Like Khazna, Africa Data Centers is also planning to expand its regional footprint with the launch of new facilities in countries like South Africa, Kenya, Egypt, Morocco, Zambia, and Rwanda, among others.

Read More - Decarbonization: Asking billions in investment from government and cement makers globally

In the Asia Pacific region, too, investment in the development of new facilities is expected to follow the uptrend from the short to medium-term perspective. This comes on the back of a growing shift towards business digitalization, driving a significant surge in demand for cloud services.

· Singtel, GULF, and AIS are constructing a new data center facility in Thailand. Singtel is also known to be expanding its data center capacity in Singapore and Indonesia. The Singapore-based facility is expected to begin operations in 2025. In Indonesia, Singtel has partnered with Telkom and Medco Power to build a data center facility, as it seeks to tap into the robust growth in the ASEAN markets.

In the APAC region, India is also emerging as a strong destination among tech giants and data center providers to increase their investment. Microsoft, and Amazon, among others, have already announced billions in investment in India over the next few years. This trend is projected to further continue, as more global tech giants seek to tap into the growing Indian market.

Overall, data center construction projects are likely to maintain the uptrend, even amid the current macroeconomic environment. The trend will further accelerate from the medium-term perspective, as inflation cools down and interest rate stabilizes worldwide. The construction of new facilities will, therefore, keep supporting the commercial construction industry globally over the next three to four years.