The shift east and south is accelerating, with governments, hyperscalers and regional organisations across the Middle East, Africa and Southeast Asia all investing heavily in the digitalisation of economies and societies across the region.
The Covid pandemic, increasing applications of AI, plus the roll-out of 5G networks, have all opened the throttle on this growth which is predicted to drive data centre growth at over 10% between now and 2027.
Getting the ‘Next Billion’ online demands new data centre capacity in these regions, lots of it, and quickly. And this is the challenge; finding suitable sites, securing land, sufficient sustainable power and connectivity at speed. It is no longer about location, location, location. Prospering in new markets in the south and east of the globe is about location, green power and skills.
Securing limited stock
Finding the right locations is the first challenge. Not only in terms of proximity to immediate populations to serve, but sites well placed to act as regional hubs to drive new investments and opportunities for leadership in the digital economy that transcend national boundaries. In developed data centre markets, it’s easy to go to established hubs like the DFLAP markets or the emerging hot spots in the Nordics or eastern Europe. You know what you are looking for and can find sites that are similar or even adjacent to what you already know.
With little existing stock, there is not this layer of experience and understanding to call upon in rapidly emerging markets like the Middle East and North Africa. There are few established hubs and no ‘muscle memory’ of what makes a good site. It’s hard graft to locate, visit, assess and secure the right sites.
One solution, in common with other markets, is brownfield sites that can prove faster and easier to develop. Some infrastructure may be in place, some power, maybe even some connectivity. Finding the right sites – and persuading existing landowners of the benefits of developing data centres – is the route to rapid development of the capacity needed. Creating win-win situations, that not only see fair prices for land (rental or purchase) but create opportunities for landowners and local communities to truly benefit from the siting, construction and operation of a data centre, is essential.
Access to sufficient power supply is an issue in emerging economies as it is everywhere. However, the root of the problem, and the route to the solution, are different here. Many emerging nations have relatively under-developed energy grids. Their problem is not ageing grids not designed to handle the power demands of modern infrastructure, but relatively sparse energy distribution infrastructure, particularly outside of urban areas. The opportunity lies in coordinating digital and energy infrastructure investment and expansion – and in ensuring that new generation is sustainable and green. With less legacy infrastructure, emerging markets are free to ‘leap-frog’ to new generation technologies that can build green grids from the outset.
We often wonder why hyperscalers need to locate close to metros. It is easier to lay cable to connect to them than to build energy distribution infrastructure to bring the power. Why not have the data centre come to the power rather than take power to the data centre? Integrated planning allows cities and states to build future-fit energy capacity ready to meet the demands of urbanisation, digitalisation and growth as one. Exciting innovations such as micro-grids and alternative primary power sources are entering the consideration of designers and planners across the region as they look to integrate cutting-edge technologies into integrated plans. We are looking to combine our site developments with investment in new generation capacity in close proximity to maximise efficiency and place data centres at the heart of business and enterprise zones.
Ensuring investment in sufficient energy generation ahead of new data centre capacity is at the heart of our philosophy. Not only will it help prevent the constrained supply and restrictions seen in established markets, but it will leverage government policies to invest in renewable and sustainable energy generation. The region has made significant commitments to switch to fossil-free power, planning to invest $182.3 billion to add up to 57GW of sustainable energy capacity by 2025. Solar and wind-power generation can supply 100% carbon free power for sites as well as to surrounding businesses and consumers. In Saudi Arabia for example, we have formed a joint venture with Tamasuk, one of the region’s leading investors and developers of infrastructure projects, including wind and solar energy farms. Working closely with Tamasuk and other partners, we can ensure sufficient power generation is available close to planned data centre sites.
Finding the right skills in emerging markets is also a challenge in rapidly delivering the data centre capacity demanded by hyperscalers looking to initiate new cloud regions, and by governments looking to digitalise their economies. As noted above, it is imperative that these facilities create value for the local communities, and that means meaningful, well paid, high skill jobs for local people. Local and national governments across the region are focused on improving digital literacy and skills – but that takes time. How can this be squared with the need to bring capacity to market quickly?
A combination of partnering and joint ventures, plus utilising innovative modular designs, can deliver high specification, high security data centres that can be built quickly using a high proportion of local labour. Once built, offering specialised training to existing tradespeople such as electricians, engineers, facilities managers and security staff can quickly overlay the specifics of data centre operations. Working with established training providers such as Cnet, we can provide industry recognised qualifications to our local staff. Not only does this equip them for an exciting role now, but it establishes the foundation for a rewarding career in the nascent data centre industry in their country and beyond.
Location, green power and skills
Location was the primary concern when building a portfolio of technical real estate in the developed world. It remains important in emerging markets and securing the right sites at the right time and price to meet the capacity demands of leading digital service providers is still fundamental. With less legacy infrastructure, we can locate more flexibly as part of integrated planning schemes.
Accessing sustainable power is of equal importance in both established and new markets, but for different reasons. With massive investments in sustainable generation, new efficiency technologies and future-proof distribution grids, emerging markets may have the edge on power-constrained locations reliant on legacy generation capacity.
And with skills, the combination of government focus and young, dynamic populations is rapidly producing the high-skill workforce needed to operate data centres as the engine of the next wave of growth. With the right partners, location, sustainable power and skills are the catalyst to only accelerate, but turbo charge the shift east and south for the data centre world.