Data Center Market Growth Insights – Market Area to Reach 109.61 Million Sq. Ft. and Power Capacity to Exceed 28,307 MW by 2031.

Global Data Center Construction Market Landscape 2026-2031

DATA CENTER CONSTRUCTION MARKET SIZE & INSIGHTS

The global data center construction market size is projected to reach USD 144 billion in 2025 and USD 323.72 billion by 2031, growing at a CAGR of 14.46% during the forecast period. The global data center construction market investments grew by around 56% in comparison to 2024. The rapid digital transformation across various industries has significantly increased the demand for data storage, processing, and cloud-based services.

As of 2025, the data center construction cost index, Tokyo remains the world's most expensive data center construction market at $15 per watt, followed by Singapore and Zurich. At the other end of the spectrum, Shanghai, followed by Mumbai, is the least expensive market globally, with construction costs of approximately $6.0 - $6.5 per watt, reflecting significant regional cost differences in labour, supply chains, and market maturity.

Investment in the US data centers nearly doubled as compared with 2024, fueled by strong construction activity from both colocation and hyperscale operators. It is estimated that the demand for data centers will continue to grow as Artificial Intelligence (AI) becomes more prevalent. The South-eastern US, including states such as Virginia, Georgia, and North Carolina, continues to lead in data center investments, contributing over $26 billion in 2025. This is followed by the Midwestern US, with investments exceeding $23 billion in the same year, while the North-eastern US region accounted for approximately $3 billion.

The UK and Germany are among the biggest data center construction markets in Europe, which accounted for around 19.59% and 13.74% of the European data center construction market’s investments, respectively, in 2025; these countries continue to witness data center investments from local as well as global data center operators.

In 2025, the APAC data center construction market by investments increased by around 31.99%, compared to 2024, accounting for around $34.65 billion. China accounted for around 41.81% of the APAC data center construction market’s investments in 2025, and Southeast Asia contributed approximately 19.03% of the region’s data center construction market’s investments during the same period.

In 2025, total investment in the African data center construction market is estimated at approximately $1.24 billion, with the majority directed toward colocation developments ($966 million). Enterprise data centers account for an investment of around $277.5 million during this period.

The ongoing conflict in the Middle East is increasing costs across the data center value chain. A sharp rise in global oil and energy prices, coupled with the depreciation of African currencies and higher freight charges resulting from disruptions in the Red Sea and Strait of Hormuz, is raising the cost of importing servers, power systems, cooling equipment, and other critical infrastructure.

The Nordic region is widely considered one of the most attractive global locations for data center development due to natural free cooling. Locations in Norway, Sweden, Finland, and Iceland are particularly attractive due to access to renewable power sources such as hydropower, wind energy, and geothermal energy.

DATA CENTER CONSTRUCTION MARKET SEGMENTATION INSIGHTS

1. Colocation data centers dominate the market across all key metrics during 2026–2031, accounting for the largest data center construction market share of investments ($1.06 trillion), white floor space (412.32 million sq. ft.), and power capacity (98,809 MW), driven by growing cloud and AI infrastructure demand. Hyperscale data centers represent the second-largest segment with substantial investments of $473.33 billion and 44,682 MW of power capacity, while enterprise data centers account for a comparatively smaller share, reflecting the ongoing shift from on-premises infrastructure to large-scale hyperscale and colocation facilities.
2. Data center operators are increasingly deploying high-capacity UPS systems (>750 kVA) with redundant configurations such as N+1, N+N, and 2N to ensure reliable and efficient operations, while smaller facilities and hyperscale environments often use UPS systems below 500 kVA and in-rack solutions. For example, Sify Technologies’ Rabale data center uses an N+N UPS configuration with 10 minutes of backup, and KIO Networks’ MEX 6 facility is equipped with a 900 kVA UPS system.
3. Despite being a major source of carbon emissions, generators remain essential for data centers due to ongoing power reliability and grid stability challenges, driving operators to adopt more efficient and cleaner backup power solutions. For example, Africa Data Centres’ JHB1 facility provides 48 hours of generator-backed power, Equinix’s BG2 data center uses diesel generators with N+1 redundancy, and Gulf Data Hub’s Dubai facility operates a 16,000 kVA N+1 generator system with 24 hours of backup fuel storage.
4. Modern data centers are designed in line with ASHRAE cooling guidelines and Uptime Institute Tier standards, leveraging advanced cooling technologies and redundancy to optimize thermal efficiency and ensure reliable operations. For example, NTT DATA’s Ho Chi Minh City 1 facility uses water-cooled systems, CRAH units, AHUs, and cold aisle containment, while Urbacon’s DC5 data center features N+1 direct evaporative cooling, and Moro Hub’s Dubai facility is equipped with cooling towers, N+1 chillers, CRAH units, and hot/cold aisle containment.

DATA CENTER CONSTRUCTION MARKET - KEY TRENDS

AI Transforming the Landscape of the Data Center Market

1. The AI industry is set to significantly increase the size of hyperscale data centers. Even though the current AI investments haven’t fully compensated for the growth in hyperscale data centers, the capacity of these data centers, especially for AI workloads, is expected to almost triple in the next five to six years. With the rising adoption of AI across several industries, new data centers are being designed to support high-density AI-based workloads.
2. Europe is undergoing a rapid digital transformation driven by widespread enterprise adoption of AI, cloud, and data-driven technologies, significantly increasing demand for data center infrastructure. Countries such as Germany, the UK, and Italy show near-universal digital connectivity, with Germany reporting 93% of organizations prioritizing AI and digital technologies, the UK reaching 97.8% internet penetration with over 55 million social media users, and Italy achieving 90% internet penetration.
3. Rapid digitalization and AI adoption are driving strong demand for hyperscale and AI-ready data center infrastructure across Latin America. Governments and enterprises are investing heavily in AI, connectivity, and digital transformation initiatives. Examples include Brazil’s $4 billion National AI Plan, Colombia’s $116 million National AI Policy, and Mexico’s plans for Latin America’s first NVIDIA-powered HPC and AI center in Nuevo León with an estimated $1 billion investment. These initiatives are increasing demand for high-density, GPU-ready, and cloud-enabled data center capacity.
4. In the US, Operators are redesigning facilities to support GPU-intensive workloads, liquid cooling, and higher rack power densities. Examples include Meta's redesign of multiple U.S. data center projects to accommodate AI infrastructure, NTT DATA's 2025 expansion adding over 370 MW of capacity and enabling more than 200 MW of AI workloads, and Lambda's AI Factory in Missouri, which will deploy more than 10,000 NVIDIA Blackwell Ultra GPUs for next-generation AI computing.
5. The $500 billion Stargate initiative in the U.S., Oracle's planned $40 billion investment in NVIDIA GB200 chips for OpenAI infrastructure, and Applied Digital's 400 MW AI-focused campus in North Dakota highlight the scale of AI-driven capacity expansion. As GPU, ASIC, and FPGA deployments increase, data center operators are investing heavily in liquid cooling, energy-efficient power systems, and AI-optimized facility designs to address growing power density and thermal management requirements.
6. In January 2026, Alibaba Group, one of the leading Chinese cloud and AI services providers, announced its plans to increase the investment of the company to approximately $69.05 billion to enhance AI infrastructure in China over the next three years.

Renewable Energy and Sustainability Initiatives by Data Center Operators

1. With the rapid growth in AI and cloud workloads, energy demand is increasing significantly. As a result, sustainability has become essential for managing carbon emissions, operating costs, and ensuring long-term grid stability. Data centers must prioritize sustainability, especially as local governments and residents are increasingly opposing projects that consume excessive energy, strain water resources, and contribute to higher emissions or noise levels.
2. For a more sustainable approach, data center operators in the US are increasingly investing in clean and renewable energy. Several companies are securing long-term power purchase agreements, building on-site solar and wind projects, as well as integrating battery storage systems to reduce carbon emissions and improve energy efficiency.
3. In November 2025, TotalEnergies signed a 15-year power purchase agreement to supply Google with 1.5 TW-hours of renewable energy from its Montpelier solar farm in Ohio. The deal will support the clean energy needs of Google’s data centers in the state.
4. Latin America is strengthening its position as a sustainable data center hub through renewable energy expansion and policy support. Countries such as Argentina, Chile, Colombia, and Mexico have established ambitious clean energy targets, creating favorable conditions for hyperscale deployments. For example, Argentina's proposed OpenAI–Sur Energy Stargate project links AI infrastructure deployment with dedicated renewable energy supply, while Colombia released over 5GW of grid connection capacity in 2025 to accelerate new solar and wind projects that can support future data center demand.
5. The Nordic region is emerging as a global benchmark for sustainable data center development, leveraging abundant renewable energy resources and ambitious national decarbonization targets. Countries such as Sweden, Norway, Denmark, and Finland are increasingly attracting hyperscale investments due to access to low-carbon power. Examples include Equinix’s Stockholm facilities operating on 100% renewable energy, EcoDataCenter’s Falun campus powered entirely by wind and hydropower, and Amazon’s 472 MW wind power agreements in Finland, which increased its contracted renewable energy capacity in the country to 772 MW.
6. The UAE aims to achieve the target of zero carbon emissions by 2050. Dubai has announced its plan to achieve a 50% reduction in carbon emissions by 2030. The Energy Strategy 2050 is the first energy strategy in the UAE that aims to increase the composition of renewable energy from 25% to 50% in the total energy mix by 2050.
7. AI data centers are changing sustainability standards in several ways, including raising acceptable power density limits, expanding metrics beyond Power Usage Effectiveness (PUE), driving the adoption of liquid cooling, tightening expectations for water use, requiring sourcing of carbon-free energy, promoting waste heat reuse, demanding grid-friendly operations, and emphasizing the full lifecycle impact.

GEOGRAPHICAL ANALYSIS

1. In the US, the pricing of industrial land for data centers varies significantly by region. As operators are currently acquiring land at peak levels for construction, it is expected that prices and rates will increase. Northern Virginia, especially Loudoun County, is among the costliest areas to buy land for data centers in the US.
2. Canada is one of the emerging data center markets in North America. As a key regional hub, the demand for data centers is steadily increasing due to its strategic location (near the US), infrastructure, and the government initiatives and support for data center development.
3. The costs of industrial land vary from one country to another in Europe. For example, the cost of industrial land ranges between $500 to $9,500 per square meter in the UK, it ranges between $750 to $2,200 per square meter in Denmark, and in Italy, industrial land costs range between $160 to $440 per square meter. The costs of industrial lands in markets like the UK, Germany, France, Switzerland, the Netherlands, and Ireland are comparatively higher.
4. The APAC data center construction market is expected to expand significantly, growing with an absolute growth rate of around 142.07% from 2025 to 2031. The data center construction costs vary location to location, and Japan and Singapore are among the most expensive countries in terms of data center construction costs in APAC, which account for average data center construction costs of around $14 per watt and $15 per watt, respectively.
5. China accounted for around 41.81% of the APAC data center construction market’s investments in 2025, and Southeast Asia contributed approximately 19.03% of the region’s data center construction market’s investments during the same period. India and Australia are among the biggest data center markets after China in APAC, which accounted for around 12.39% and 12.16% of the APAC data center investments in 2025, respectively.
6. Malaysia continues to emerge as a prime destination for data center investments due to its location between major Southeast Asian markets and robust digital infrastructure. Furthermore, the comparative affordability of land and energy costs, especially when contrasted with neighboring countries such as Singapore, continues to attract global technology companies to establish and grow their operations in Malaysia.
7. The data center construction market in Latin America is projected to attract a cumulative investment of $31.00 billion between 2026 and 2031. This growth is primarily driven by Brazil, Chile, Mexico, and other countries emerging as promising investment destinations.
8. In September 2025, Alibaba Cloud announced plans to launch its first data center in Brazil as part of a broader global expansion across eight locations. The investment supports rising demand for AI-driven cloud services and strengthens the role of Brazil in the international cloud infrastructure network of Alibaba.
9. Sweden is one of the fastest-growing data center markets in the Nordic region. The Swedish data center market is driven by factors such as the growing adoption of digital platforms, cloud adoption across businesses, and the adoption of advanced technologies, including AI, IoT, and big data.

GLOBAL VENDOR LANDSCAPE

1. The Global data center construction market has the presence of key investors such as AirTrunk, Aligned Data Centers, Amazon Web Services (AWS), Apple, CDC Data Centres, CloudHQ, Compass Datacenters, CyrusOne, DataBank, Digital Realty, EdgeConneX, Equinix, Global Switch, Google, Iron Mountain, Meta, Microsoft, NTT DATA, QTS Realty Trust, STACK Infrastructure, ST Telemedia Global Data Centres (STT GDC), Switch, Vantage Data Centers, and others.
2. In November 2025, Google announced an investment of $6.38 billion (€5.5 billion) to expand its data center and office footprint in Germany. The plan includes developing a new data center in Dietzenbach and further investments in its existing Hanau campus and offices in Berlin, Frankfurt, and Munich.
3. In September 2025, Microsoft announced plans to develop a new data center in Elsdorf, Germany, as part of its regional expansion near Cologne. The project follows the earlier commitment of the company to invest €3.2 billion ($3.44 billion) to expand AI and cloud infrastructure capacity in Germany.
4. In November 2025, Meta announced plans to invest approximately $600 billion in digital infrastructure across the US over the next three years; this was aimed at strengthening large-scale computing capacity and supporting America’s long-term technological leadership.
5. Some of the major colocation data center operators in the US include CyrusOne, DataBank, Digital Realty, Equinix, NTT DATA, EdgeConneX, Aligned Data Centers, H5 Data Centers, HostDime, Hut 8, Iron Mountain, QTS Realty Trust, Sabey Data Centers, Skybox Datacenters, STACK Infrastructure, Stream Data Centers, Switch, T5 Data Centers, TierPoint, and Vantage Data Centers.
6. Some of the major colocation data center companies, operating in the European market include, Ark Data Centres, AtlasEdge, atNorth, Borealis Data Center, Bulk Infrastructure, CloudHQ, Colt Data Centre Services, CyrusOne, DataPro, Data4, Digital Realty, EdgeConneX, Equinix, Global Switch, Global Technical Realty, Goodman, Green Mountain, Iron Mountain, Ixcellerate, Keppel Data Centres, LCL Data Centers, maincubes SECURE DATACENTERS, Nation Data Center, nLighten, NTT DATA, Pure Data Centres Group, QTS Realty Trust, Rostelecom, STACK Infrastructure, Telehouse, Thésée DataCenter, Vantage Data Centers, VIRTUS Data Centres, Yondr Group, and others.
7. Some of the major colocation data center operators in the APAC data center construction market include ST Telemedia Global Data Centres, NTT DATA, Princeton Digital Group, EdgeConneX, Colt Data Centre Services, GDS Holdings, Equinix, Digital Realty, CtrlS Datacenters, China Unicom, Global Switch, CapitaLand, China Mobile International, Chayora, BDx Data Centers, AdaniConneX, Iron Mountain, KT Corp, and others.
8. The Latin American market has the presence of several global and regional colocation operators that are investing in the market. Some of them include Equinix, Ascenty, ODATA (Aligned Data Centers), Scala Data Centers, EdgeConneX, HostDime, Tecto Data Centers, Elea Data Centers, Cirion Technologies, Claro, Gtd Group, NextStream, and several others.