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Data Centres – Insufficient supply for the exponential needs

Worx Real Estate Consultants has just published a paper on Data Centres, an emerging sector in Portugal which has been standing out due to the various projects in pipeline recently announced.

The study serves as an initial guide for investors and enthusiasts of the Data Centre sector who aim to learn more about concepts, requirements, fundamentals, and existing and future supply, not only to broaden their knowledge of a new emerging sector in real estate but also to explore and assess opportunities in this area that guarantees higher returns and may, therefore, motivate some investors.

The study proceeds to evidence that there is insufficient supply for exponential data consumption and storage needs. The low availability achieved in the main FLAP markets (Frankfurt, London, Amsterdam and Paris) has diverted demand to secondary markets such as Portugal, Spain, Italy, Poland and Switzerland.


Data Centres in Portugal: highlight in relation to other countries

“Portugal has stood out positively for having a reduced supply and few players still present in the market, while presenting all the market fundamentals to attract new investments” mentions Silvia Dragomir, head of the Research Department. One of them is that Portugal has a strategic position in relation to submarine data transmission cables that connect Portugal to 5 continents through 11 cables, plus 5 within mainland Portugal and the islands. Other factors such as security, qualified labour, access to renewable and cheap energy, low probability of physical risks, good optic fibre network and deep waters with extensive maritime protection by NATO are important for these players to establish and invest in the country.


At the time of this analysis, it is estimated that the offer includes 38 data centres located mainly in the Porto (Porto, Matosinhos, Maia, Ermesinde, Vila Nova de Famalicão) and Lisbon (Lisbon, Barreiro) areas, with other specific locations such as Viseu, Covilhã, Évora, Faro, Azores and Madeira. These are mostly Tier I and II, and only 2 data centres identified to date as Tier III, which reflect lower or higher redundancy capacity and fault tolerance when there are interruptions, interventions, or maintenance in them.


Taking into account the presented fundamentals for the development of this sector and the lack of supply, there is a tendency to increase supply and establish new projects in areas where there are submarine cable connections, namely cities such as Lisbon and Sines, but there are also others with unexplored potential for the same reason, namely Cascais, Seixal, Sesimbra, Azores and Madeira.


The Research Department at Worx Real Estate Consultants identified 7 projects in pipeline that will add more than 600 MW to the market. Two hyperscale data centre projects stand out, one in Sines by Smart Campus which will have a total capacity of 495 MW by 2027 and another in Vila Franca de Xira promoted by Merlin Properties and operated by a joint venture with Edged Energy which could reach 73,000 sq.m with a capacity of up to 100 MW. The remaining 5 projects are now smaller (~2 MW) or of unknown size. Of these, there are 3 projects that should be completed as early as this year 2023, with a total capacity of over 17 MW.


Data Centres and Sustainability: an important relationship

The Data Centres sector is also not immune to the growing sustainability requirements since they are responsible for about 2% of greenhouse gas emissions and 3% of the global energy consumption, mainly due to the need of cooling the servers that overheat easily. Therefore, a report with Best Practice Guidelines for the EU Code of Conduct on Energy Efficiency in Data Centres was published by the EU in late 2021. Among the various measures are energy efficiency concerns, the implementation of renewable energy for electricity generation, the use of rainwater for cooling or, alternatively, liquid cooling.

June 21, 2023


If you want to know more about the “Data Centres – Insufficient supply for the exponential needs”, download it now in the Research area of our website.

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