Data Centres Report: “Resilient assets with strong long-term potential”

As we wrap up the year, it’s exciting to look at how specific sectors drive real estate transformation. From data centers emerging as critical infrastructure to industrial markets setting benchmarks in Mexico, this edition captures the trends and challenges shaping 2025 and beyond.

I am Gustavo Favaron, GRI Club’s CEO. In this year’s last issue of my monthly newsletter, I bring you insights on the UK’s elevation of data centers as essential infrastructure, India’s ambitious growth trajectory in the tech landscape, Brazil’s rapid digital expansion, and the resilience of Mexico’s industrial sector. Let’s dive in!

Data Centers: Critical National Infrastructure

In a pivotal move, the UK government recently classified data centers as Critical National Infrastructure (CNI), emphasizing their importance in supporting AI, cloud computing, and digital transformation. This decision reflects the growing global recognition of data centers as essential assets. Other governments are expected to follow suit and begin to balance the development of data centers with that of other critical infrastructure and homes.

The data center market itself is scaling up rapidly, and project sizes are also expanding significantly. In 2019, a 70 MW data center was considered large, but now campuses requiring 100-200 MW are the norm, and even gigawatt-scale projects are emerging in the US.

With projects rapidly growing in scale, developers and investors increasingly turn to joint ventures, partnerships, and diversified funding sources to manage risk, as was revealed by leading data center market players during discussions at the GRI Club, hosted in partnership with Dentons.

“Institutional investors continue to view data centers as resilient assets with strong long-term potential,” shared Alex Coulter, Real Estate Partner at Dentons. 

“A key consideration for investors is the cost and timeline of technological upgrades, such as advanced cooling systems, at lease expiry. These upgrades often take precedence over exploring alternative site uses once leases end.”

The increasing complexity of data center design and operation, coupled with the huge power demand and rapid pace of technological advancements in AI and cooling solutions, makes the sector unique in its challenges.

Explore these dynamics and the market assessment from key stakeholders in GRI Club’s latest report: Data Centres Investment Opportunities in Europe.

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India: data centre investments to top USD 100 billion by 2027

India’s data centre market is experiencing remarkable momentum. As data consumption surges, government policies evolve, and AI adoption accelerates, the country is poised for exceptional growth. According to CBRE, data centre capacity has reached 1,255 MW this year and is projected to hit 1,600 MW by the end of 2024.

While Mumbai remains the dominant hub, Tier-II cities like Ahmedabad and Lucknow are gaining prominence as data centre destinations, offering cost advantages and addressing growing regional consumption.

Investment commitments have skyrocketed, totaling USD 60 billion over the past six years and projected to surpass USD 100 billion by 2027. This surge has driven the market’s capacity to grow 2.5 times in the last 4.5 years, recording an impressive 24% CAGR (compound annual growth rate). 

Government support has been instrumental in this progress. The recent approval of USD 1.24 billion (INR 10,732 crore) for AI infrastructure, coupled with the rapid nationwide rollout of 5G, has sharply increased demand for high-speed, low-latency data storage.

However, sustaining this momentum requires substantial resources. “The future expansion of the DC industry until 2026 will require approximately 7.3 million square feet of real estate and a capital investment of USD 3.8 billion,” said Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

The growing demand is further reflected in recent transactions, with Sify Technologies launching a dedicated data centre for India's Supreme Court, while UK-based cloud provider Civo established a sovereign cloud region in Mumbai. 

Similarly, ST Telemedia Global Data Centres India (STT GDC India) has partnered with the Uttar Pradesh government through an memorandum of understanding (MoU) to develop an AI city, showcasing the increasing collaboration between state governments and private players in advancing AI-driven innovation and infrastructure.

The Expansion of Data Centers in Brazil

The inaugural GRI Data Centre Summit in São Paulo convened over 200 industry players, underscoring Brazil’s emerging prominence in this sector. Companies like Scala Data Centres - the biggest operator in Latin America, have invested over R$15 billion in just four and a half years, with an additional R$40 billion in the pipeline, according to senior vice-president  Luciano Fialho.

While São Paulo remains a focal point, new hubs like Porto Alegre and Fortaleza are gaining traction. Industry leaders at the summit emphasized challenges such as infrastructure readiness and digital demand.

"The biggest challenge is whether the markets are ready for such high and rapid figures. Are local operators prepared to meet this demand for digital infrastructure? I believe that’s the greatest challenge," Fialho told GRI Club.

Gain exclusive insights, including:

• Investor appetite for Brazilian data centers.
• Emerging locations for exponential growth - highlighted by Rodrigo Radaieski (Ascenty).
• The role of fiber optics in connectivity - discussed by Flavio Marques (Furukawa Electric).
• Key energy contract considerations - presented by Guilherme Zimmer (ILLIAN).
• The urgency for the country to act swiftly and organize itself to meet demand and avoid losing investments - highlighted by Filipe Bonaldo (A&M Infra) 

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Mexican Industrial Sector Remains on the Rise

The industrial sector in Mexico closed in November 2024 with remarkable results: an accumulated demand 15% higher than the January-December 2023 period.

This growth was driven by the manufacturing, logistics, and nearshoring sectors, reaching over 860,000 m² occupied in new operations.

Among the main markets, Monterrey led demand in the last two months with 199,000 m² occupied, followed by Mexico City with 189,000 m² and Guanajuato with 84,000 m².

The northern region stood out, concentrating 50% of national demand, while the Bajío region contributed 22%, reaffirming its importance as an industrial hub.

With a national inventory exceeding 103 million m² and an average vacancy rate of only 2.9%, rental prices have risen, reaching an average of USD 6.97 per m² per month.

The pace of construction also remained high, closing November with 5.8 million m² under development. Competition among developers has driven innovations in sustainability and space design.

It is worth noting that the sector benefits significantly from support by real estate FIBRAs, which represent more than 4.5% of Mexico’s GDP.

These FIBRAs manage over 2,000 properties, including industrial assets, with an occupancy rate exceeding 95%. They generate approximately five million direct and indirect jobs, solidifying their role as key players in the country’s economic growth.