Data centre resilience, Germany’s wavering powerhouse status, and CEE’s macroeconomic outlook
GRI Club Europe
High-level content and networking, shaping the present and future of the real estate market
Data Centres Report: “Resilient assets with strong long-term potential”
In September of this year, the UK government classified data centres as Critical National Infrastructure (CNI), vital for supporting the rapid growth of AI, cloud computing, and digital transformation, and the expectation is for other governments to follow suit and begin to balance the development of data centres with that of other critical infrastructure and homes.
As the data centre market evolves, project sizes are also expanding significantly. In 2019, a 70 MW data centre was considered large, but now campuses requiring 100-200 MW are the norm, and even gigawatt-scale projects are emerging in the US.
With projects rapidly growing in scale, developers and investors increasingly turn to joint ventures, partnerships, and diversified funding sources to manage risk, as was revealed by leading data centre market players during discussions at the GRI Data Centres Investment Opportunities in Europe 2024 Club Meeting, hosted in partnership with Dentons .
?? “Institutional investors continue to view data centres as resilient assets with strong long-term potential,” explains Alex Coulter , Real Estate Partner at Dentons.
“A key consideration for investors is the cost and timeline of technological upgrades, such as advanced cooling systems, at lease expiry. These upgrades often take precedence over exploring alternative uses for sites once leases end.”
The increasing complexity of design and operation of data centres, coupled with the huge power demand and rapid pace of technological advancements in AI and cooling solutions, makes the sector unique in its challenges.
Read the market assessment from key stakeholders in the European data centres space as they address strategies to overcome these challenges in GRI Club’s latest report: Data Centres Investment Opportunities in Europe.
Is Germany still the powerhouse of real estate investment?
Economic strength, long-term potential, and solid fundamentals in sectors like residential and logistics continue to support Germany as a prime destination for cross-border real estate investment, sentiment among market players at Berlin GRI 2024 revealed.
However, market illiquidity, regulatory complexity, and a relative lack of transparency pose hurdles for international investors, particularly newcomers.
?? During the annual conference, co-hosted by Club Partners CMS , more than sixty of the region’s leading real estate market players contributed to discussions analysing the Berlin and wider German real estate market scenario.
Berlin’s real estate market investment cycle is marked by significant price corrections, slow recovery, and persistent structural barriers. International investors at the conference demonstrated caution, but still claimed to see promise, particularly for landmark developments.
There is, however, a stark need for tax reforms, faster permitting processes, and strategic government interventions to restore confidence and liquidity in the market, particularly to ensure the city maintains its competitive edge against other growing European cities.
CEE Economic Analysis with BNP Paribas
Last week, GRI Club’s series of economy-focused Club Meetings began with the ‘CEE Economic Series’, welcoming keynote speaker Isabelle Mateos y Lago , Group Chief Economist at 法国巴黎银行 , as well as 30+ leading CEE and DACH region real estate market players.
During her address, Isabelle broadly addressed the CEE economy, highlighting the resilience of the region, but also warned of risks to growth and inflation due to uncertainties surrounding “Trumponomics”. This uncertainty is further compounded by the ongoing threat of the Ukraine war, raising concerns over the potential for an economic crisis.
?? Isabelle Mateos y Lago’s full presentation with in-depth analysis of CEE’s macroeconomic outlook is available now on the GRI Hub.
Despite a gradual disinflation process, inflation is still expected to remain above target through 2025, Isabelle presented. And, while monetary policy remains well above pre-COVID levels, partial easing has provided some relief, particularly in reducing government bond yields.
How does this affect the attractiveness of real estate investment in the region?
Isabelle explained that the CEE region still remains an attractive destination for foreign direct investment (FDI), considering competitive corporate tax rates and wage costs below those in Western Europe.
Other News ??
Corporate Radar ??
If you’ve enjoyed GRI Insights, don’t forget to subscribe!