The Real Estate of the Digital Age
Just a few years ago, the term “data center property” was familiar only within the IT sector. Today, data centers are the backbone of the digital economy. Without them, cloud services, streaming platforms, and artificial intelligence (AI) simply would not function.
The volume of global data roughly doubles every two years. In Europe alone, the data center infrastructure market is projected by ResearchAndMarkets to grow from USD 47.2 billion (2024) to USD 97.3 billion by 2030, reflecting a compound annual growth rate (CAGR) of 12.8%.
Investors are realizing that data centers are more than just high-tech buildings – they are a distinct asset class offering stable returns, long-term leases, and high entry barriers.
What Is a Data Center in the Real Estate Context?
Definition and Segmentation
A data center is a specialized building housing servers, storage devices, and networking infrastructure to process, store, and transmit data.
We can distinguish:
- Hyperscale Data Centers – very large facilities (> 10,000 m² of IT space) owned or leased by hyperscalers such as AWS, Google, or Microsoft.
- Colocation Facilities – operators lease racks or dedicated space to multiple clients.
- Edge Data Centers – smaller facilities located close to end users to minimize latency (critical for applications like autonomous driving).
Technical Specifics
Data centers are not standard buildings. They require:
- Redundant power supply (N+1, 2N).
- Precision climate control systems with high energy efficiency (target PUE < 1.3).
- Advanced physical security: multi-level access control, CCTV, biometric scanners.
- High availability: up to 99.999% uptime (“five nines”).
Market Drivers
Several structural trends are fueling the boom:
- Cloud Computing
According to Gartner, the public cloud market continues to grow at double-digit rates as enterprises migrate workloads for greater flexibility and scalability. - Artificial Intelligence (AI)
AI models such as ChatGPT or Midjourney require massive computing power, specialized hardware (GPUs), and high-performance data centers. - 5G and Internet of Things (IoT)
Billions of connected devices generate massive streams of data that must be processed in real time. - Streaming & Online Gaming
Video-on-demand, live streaming, and gaming steadily increase bandwidth demand. - Political Support
EU digital strategies, broadband expansion programs, and public investment in digital infrastructure are accelerating development.
Europe: A Market in Acceleration
According to CBRE, Europe will deliver 937 MW of new data center capacity in 2025 – 43% more than in 2024. Over half of this will be concentrated in FLAP-D cities (Frankfurt, London, Amsterdam, Paris, Dublin). Secondary markets such as Madrid and Milan will each add over 100 MW of new capacity.
Despite this expansion, shortages in power supply and available land remain. Cushman & Wakefield reports that EMEA operational capacity stands at 10.3 GW (H1 2025), with 2.6 GW under construction and 11.5 GW in the planning stage – a 43% year-on-year pipeline growth.
CBRE research shows 95% of investors plan to increase their exposure, with 41% aiming to invest over USD 500 million. The greatest perceived risks today are regulatory hurdles and power availability.
Why Data Centers Stand Out as an Asset Class
Long-Term Lease Agreements
Hyperscalers often commit to sites for 10–20 years, with indexed rent adjustments and strong credit ratings.
High Barriers to Entry
Expensive construction, lengthy permitting, and specialized infrastructure limit new market entrants.
Attractive Risk–Return Profile
Core assets deliver yields of 4.5–6% in Europe, with value-add projects offering significantly higher returns.
Opportunities and Risks for Investors
Opportunities
- Structurally growing demand.
- Diversification from traditional asset classes.
- ESG potential through waste heat reuse, renewable energy, and certifications.
Risks
- Technological shifts (new cooling methods, chip architectures).
- High energy costs (40–60% of operating expenses).
- Lengthy permitting processes.
Risk mitigation: secure sites with reliable power supply, modular designs, and partnerships with experienced operators.
Market Examples
- Frankfurt – Europe’s leading internet exchange point (DE-CIX) with top-tier power and connectivity.
- Amsterdam – strict regulations but excellent international connectivity.
- Madrid – rapid rise driven by global tech investment, focus on water-free cooling technology.
Conclusion and Outlook
Data centers are the physical foundation of digitalization – making them a future-proof investment sector. Investors who build expertise today, secure strategic locations, and adopt sustainable concepts can create high-yield portfolios with strong growth prospects.
Prime East Property Solutions supports investors, operators, and municipalities in site analysis, permitting, and execution of data center projects – from planning to handover.
Contact us to learn more about current projects and investment opportunities.
Sources & Further Reading
- CBRE (2025). Global Data Center Investor Intentions Survey 2025.
- CBRE (2025). Europe set to see record data centre capacity roll-out in 2025. Reuters, 13 Feb 2025.
- Cushman & Wakefield (2025). EMEA Data Centre Update – H1 2025.
- ResearchAndMarkets.com (2024). Europe Data Center Market Landscape 2025–2030.
- Reuters (2025). European data centre space shortage expected in 2025 as AI booms.
- Datacenterdynamics.com (2024). Nordics and Southern Europe to see 110% Data Center demand growth by 2030.
- Gartner (2024). Public Cloud Services Forecast.
