The EMEA data center market has continued to be buoyant in 2025. However, navigating regulatory nuances and utility bottlenecks remains crucial to unlocking the sector’s huge growth potential
The EMEA data center market continues to grow and shows little sign of slowing down, despite global trade uncertainty and capital markets volatility.
According to JLL, the EMEA data center space is forecast to grow at a compound annual growth rate of 25% over the next three years, 10 percentage points above the market’s global average during the same period. Demand for data center capacity has outstripped new supply for the past few years, bringing down vacancy rates and pushing up rents.
These strong growth projections and rising rents continue to sustain investment in data centers. Much of this activity is being led by hyperscalers (large technology companies that require huge cloud-based infrastructure), which are expanding their geographic reach and boosting overall capacity to meet soaring demand. Private equity firms, infrastructure investors and real estate funds are also increasing their exposure to the rapidly-growing market for data centers.
A long investment runway
The market’s strong growth trajectory offers a long runway for investors. According to McKinsey, meeting global demand for data center capacity may require up to US$7 trillion of capital investment by 2030. Artificial intelligence (AI) will be a primary driver of demand for more computing capacity, with McKinsey predicting that AI-related workloads will increase 3.5x from 44GW in 2025 to 156GW by 2030.
Total IT loads in the mature “FLAP-D” (Frankfurt, London, Amsterdam, Paris and Dublin) markets are all expected to expand significantly over the next three years. These established markets have traditionally been the first port of call for data center investment in EMEA, offering well-established technology ecosystems and reliable connectivity and infrastructure.
However, as these core markets become saturated, new opportunities are emerging in other European jurisdictions, most notably in the Nordics as well as in the Middle East and Africa.
Nordic countries are becoming increasingly popular destinations for data center investment, thanks to their wealth of renewable energy sources and colder climates, crucial resources for powering and cooling data centers. Investment is also accelerating in the Middle East and Africa, where rising digitalization is driving greater demand for data-related services and infrastructure.
South Africa is another jurisdiction which is attracting international investment and interest from hyperscalers. For example, California-based digital infrastructure company Equinix opened its first data center in the country in Johannesburg at the end of last year. Meanwhile, in the Middle East, recent high-profile deals include New York-headquartered KKR’s US$5 billion investment partnership with independent data center player Gulf Data Hub, announced in January 2025. More recently, in April 2025, the Emirates Integrated Telecommunications Company (du) announced that it was partnering with Microsoft to develop a new hyperscale data center in the United Arab Emirates.
Analysts expect data center investment beyond the traditional FLAP-D markets to continue to grow, as investors look further afield in response to power constraints in key centers such as Frankfurt. At the same time, the use cases for data centers are becoming more diverse. For some, the priority remains proximity to end-user markets to reduce latency, while other centers are being built for different purposes such as training AI or simply storing data—uses that do not require immediate access to consumer markets.
For developers and investors active in EMEA, both within and beyond the core FLAP-D markets, financing for new projects is widely available. Lending markets for data centers have evolved rapidly, with industry-specific documentation (a blend of real estate, leverage finance and infrastructure debt terms) evolving across the space.
As the range of investors has broadened, so too has the suite of financing products available. Data center investors can now access a wide range of debt options, including direct lending facilities, syndicated loans, junior debt and Holdco PIK structures in sophisticated markets. In more nascent markets in Africa and the Middle East, domestic commercial banks and regional development banks have been reliable sources of financing for data center projects.
Navigating bottlenecks and regulation
Unlocking the EMEA market’s huge growth potential requires a nuanced understanding of local regulation and utility access. In Europe, for instance, countries such as Ireland have implemented strict rules that significantly limit the development of new data centers requiring grid power. Meanwhile, in the UK, new data centers have to wait between 5-10 years on average to secure grid connections.
In Norway, new disclosure requirements require data center operators to report on total energy consumption, power usage for cryptocurrency mining and details of their customer base, whereas in Germany, environmental permits may be required for emergency generators depending on the size of the deal. In emerging economies like South Africa, which continues to contend with persistent power-supply bottlenecks, the government has advised data center operators not to rely on the national grid and instead look to supply their own power.
Overall, public policymakers across EMEA recognize the strategic and economic value of expanding their data center infrastructure. However, permitting, licensing and operational requirements can vary significantly between jurisdictions.
This patchwork of regulatory frameworks will continue to shape investment decisions and return expectations across EMEA. The investment opportunities are immense, but allocating capital to new projects must be grounded in a clear understanding of regional differences.
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