The Central and Eastern Europe data center construction market size was valued at USD 575 million in 2022 and is expected to reach USD 1.05 billion by 2028, growing at a CAGR of 10.68% from 2022 to 2028. The growing popularity of IoT, the emergence of 5G networks, the adoption of cloud-based services, and the demand for streaming online entertainment content at high speeds are the major factors driving the data center market growth in Central & Eastern Europe. Also, the availability of adequate land, low power cost, free cooling, and renewable energy in the region are likely to attract more investors in the industry. Further, the Central and Eastern Europe data center construction market is among the emerging markets and is witnessing growth in development and operations.

Some of the preferred locations by operators in the Central and Eastern Europe data center construction market include Poland and Austria. However, the invasion of Russia over Ukraine negatively impacted the region's growth as many multinational and tech companies imposed sanctions and quit the country. The political instability between the countries will lead to a decline in Russia's data center investment and development. However, we expect the situation to ease and cool in 1-2 years, after which we expect the industry to pace up regarding data center investments. Some of the trends and enablers that will contribute to the growth of the Central and Eastern Europe data center construction market are:

• Adoption of cloud-based services
• 5G connectivity and edge data center development
• Sustainability initiatives by data center operators
• Adoption of AI-based infrastructure
• Increased demand for big data and IoT

KEY HIGHLIGHTS

• Digitalization across businesses will contribute to a surge in data center investments by colocation, cloud, Internet, and telecommunication providers.
• Telecom companies such as Orange, T-Mobile, A1 Telekom, O2 (Telefonica), Vodafone, and others are responsible for the region's deployment and introduction of 5G services.
• The trend of procuring renewable energy to power its facilities by the data center operators is likely to continue during the forecast period. Several operators are signing power purchase agreements with renewable energy companies. For instance, Orange signed a new PPA with Enertrag to power its operations in Poland.
• Demand for data storage and hosting services is likely to increase in the region, due to which the industry is likely to witness the entry of new players. In 2022, some new entrants in the Central and Eastern Europe data center construction market were Vantage Data Centers, ClusterPower, and Data4. However, these new players will face competition from local and established global players.
• Supply chain disruption, increasing inflation rates, shortage of skilled workforce, and political disturbance with Russia are likely to negatively impact the Central and Eastern Europe data center construction market.

SEGMENTATION INSIGHTS

• Incorporating modular power infrastructure in the Central and Eastern Europe data center construction market will likely provide higher OPEX savings for data centers over time as they are more efficient, require lower maintenance, and reduce space.
• The importance of monitoring is growing with the adoption of intelligent real-time monitoring software with Automation and AI features that can predict maintenance requirements, component failures, and automatic switchovers for uninterrupted operations.
• In terms of cooling systems, free cooling techniques have grown significantly over the last few years across regions with favorable climatic conditions that can use evaporative/adiabatic coolers for facility cooling purposes.
• Innovative designs such as district heating are expected to grow among facilities developed in colder climatic conditions. For instance, Floridsdorf Hospital in Vienna, Austria, received waste heat from Digital Realty’s facility in Vienna, Austria.
• The industry had less impact of supply chain disruption and inflation on the facility construction cost. According to Turner & Townsend, the data center construction cost per watt remained unchanged in Vienna, Austria, and Warsaw, Poland, in 2022 as compared with 2021.
• Apart from the construction, installation, and commissioning services, facilities also invest in improving physical security, monitoring, and management of facilities through data center infrastructure management (DCIM) on a real-time basis.

GEOGRAPHICAL ANALYSIS

Russia

• In 2022, Russia's data center construction industry witnessed an investment of around USD 190 million, around a 37.7% decline compared to 2021. The main reason for the decline was the political disturbance of Russia with Ukraine that led to major global companies' exit, creating a market shortage of equipment and infrastructure.
• Around 250 MW of data center capacity will be added to the Russian industry during 2023-2028. Providers such as Rostelecom and IXcellerate have planned to expand their facility power capacity by 300 MW and 200 MW, respectively, by constructing multiple facilities over the next few years.

Poland

• Poland's data center industry is among the emerging markets and has witnessed growth recently. The industry has witnessed several new entrants, such as Data4 and Vantage Data Centers, building their presence in the market.
• One of the major factors driving the Poland market is increasing land prices and the unavailability of land to scale up in prime locations in Western European countries such as the UK and Germany. Such factors lead investors to shift their focus to markets such as Poland, which offers ample land and power with options to scale up stably.

Austria

• The market is witnessing the entry of several global cloud companies investing in the industry. For instance, Microsoft and Google have planned to open a dedicated cloud region in Austria. Amazon Web Services has planned to open an edge location in the country.
• The investment by all these major operators will provide an opportunity for other global colocation operators, such as Equinix, Vantage Data Centers, and others, to enter the market and explore the benefits and opportunities offered by the country.

Other Central & Eastern European Countries

• Other countries in the Central and Eastern Europe data center construction market include the Czech Republic, Hungary, Bulgaria, Croatia, Estonia, Slovakia, and others. These countries witnessed 1-2 investments, and the trend is expected to remain the same for the next 2-3 years.
• The demand from Russia will likely shift to these countries due to the political instability between Russia and Ukraine. These countries have ample land and the presence of some global operators, such as Digital Realty in Croatia and Equinix in Bulgaria.

VENDOR LANDSCAPE

• Vendors such as Schneider Electric, Rittal, Hewlett Packard Enterprise, and Delta Power Solutions provide infrastructure based on OCP design. This will aid in market revenue growth for these vendors, as many organizations prefer solutions such as 48V DC UPS systems.
• The growth in data center activities across the region will be a major source of revenue for construction contractors. Some prominent construction contractors in the Central and Eastern Europe data center construction market include AECOM, Arup, DataDome, Deerns, Flour Corporation, ISG, Mercury, Turner & Townsend, Winthrop Engineering and Contracting, and others.
• The major colocation operators active in the Central and Eastern Europe data center construction market include Rostelecom, IXcellerate, 3data, Equinix, Digital Realty, NTT Global Data Centers, 3S Group, and others.
• The market provides several opportunities to the operators operating in the market. Several players entered the industry to explore the region and enjoy the opportunities. Some of the new entrants in the market are Vantage Data Centers, Data4, and ClusterPower.