Castleforge, a real estate investor that operates in both the office and hospitality markets, is set to enter the data centre market for the first time, with the firm acquiring the Redhill Data Centre for a figure in excess of £100 million.
Funded by ICG Real Estate, the acquisition sees Castleforge partnering with Galaxy Data Centers, a full-service data centre operator and advisory firm.
The Redhill Data Centre campus, located in Foxboro Business Park, spans around 11,800 sqm (approximately 127,000 sq ft) across three buildings and currently offers 26 MVA of power. Castleforge and Galaxy plan to expand the facility’s capacity to meet growing demand for digital infrastructure, largely driven by advancements in AI and hybrid cloud computing.
Adam MacLeod, Partner at Castleforge, commented, “Data centres have been an attractive prospect that we have been monitoring for some time, but with advancements in AI and cloud computing accelerating demand, we have been eager to find the right opportunity in which to invest. The sector also fits within our speciality of operational real estate investment, and we see this as a logical extension to our existing capabilities.
“Redhill Data Centre’s proximity to London means it offers an important hub for digital services that require fast connections to the capital. With no sign of digital innovation slowing down, we felt this was the right time to make a financial commitment to the market and believe there will be significant further opportunities to come.”
Paul Leong, Chief Financial Officer at Galaxy Data Centers, added, “Redhill presents a rare opportunity to acquire a high-performing data centre in the prime London market, with strategic potential for expansion in both power and scale. We see tremendous growth potential to expand the facility’s power capacity and grow Redhill’s customer relationships. We are dedicated to enhancing the service and experience for all Redhill’s customers throughout this transition and beyond.”
Dave Misra, Managing Partner at Galaxy Data Centers, concluded, “Redhill, with its robust 26 MVA capacity, is fully equipped to meet customers’ immediate needs. Looking ahead, we are exploring a 10-15 MW build-to-suit expansion to ensure we can deliver the scale, density, and power to meet edge, hyperscale and enterprise customer needs of tomorrow in this rapidly evolving digital landscape.”
Flurry of data centre investments
Castleforge is just the latest example of a flurry of investors getting involved in the data centre market for the first time. Solaria, the Spanish energy firm which is building out solar farms across Southern Europe, entered the data centre market for the first time last year with a new facility designed for AI proposed in Spain.
The European data centre market has also been a hive of activity, with CyrusOne announcing its entry into the Italian market with its first facility in December 2024, while Bain Capital, one of the world’s leading investment firms, acquired an 80% stake in Aquila to get a foothold in the market. That’s not to mention moves by Hines and Invesco, both well-known real estate investment firms, who have both entered the UK and European data centre markets, respectively, in recent months.
It’s unlikely that the level of investment we’ve seen in recent months will be slowing down anytime soon, with Europe estimated to have seen 168% increase in investment during the first half of 2024 compared to the same period in 2023. Big names such as Microsoft have already committed to spending billions more on AI data centres, with much of that cash likely to come to European shores. That’s why it won’t be surprising to see another significant increase in investment in the first half of 2025 vs last year’s figures.
