Why data centre construction costs are rising around the world - infrabuddy.com

Why data centre construction costs are rising around the world

Skills shortages, AI, and demand for energy are driving data centre costs up (Vladimir Timofeev/Dreamstime)

An upsurge in data centre construction in emerging markets is driving up costs, according to research from Turner & Townsend.

Longstanding hotspots still top the rankings of most expensive places to build data centres.

The top five – Tokyo, Zurich, Silicon Valley, New Jersey and Singapore – are the same five from 2022, except that Tokyo, at US$13.7 per watt, has knocked Zurich off the top spot. Zurich is now US$13 per watt.

The most striking trend is the rapid cost escalation in emerging markets.

The average cost of data centre construction globally has risen by 6% over the last year, softening slightly from 8% in 2022.

But cost increases of between 11% and 22% have been seen in seven markets in Asia, Africa, and Latin America.

Jakarta ($10.5 per watt) rose to the seventh most expensive market globally for data centre construction, while Kuala Lumpur (US$10 per watt) has climbed to the 13th position.

Riyadh is a new entrant to the index with an average cost of US$10 per watt. Growth here is driven by Saudi Arabia’s investment in digital and the kingdom’s plethora of giga projects.

Labour shortages are fuelling rising costs amid soaring demand: 94% of survey respondents report skills shortages and 85% report “hot” or “overheating” conditions.

Data centres are inherently energy-hungry, and the extra computing power needed for AI makes them even more so.

It’s no surprise, then, that 92% of respondents said access to power was now more important than location.

88% of respondents said demand for AI capacity was rising fast.

Respondents were optimistic about the sector, with 79% seeing it as recession-proof.

“Demand for data storage is booming,” said Rebecca Best, Turner & Townsend’s UK data centre lead.

She said more collaboration and investment in energy provision would help ensure the long-term sustainability of the sector.

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