Growth of the Data Center Market in Southeast Europe Will Also Reflect on Croatia

The data center market in Southeast Europe has significant growth potential in the next two to three years. All indicators point in that direction, and countries in the region are becoming increasingly attractive to investors due to the presence of highly efficient communication networks along the Western Europe-Asia route and affordable costs for land, energy, construction, and labor. This is stated in a press release from the Romanian company Tema Energy, which designs and builds data centers and will soon organize the DataCenter Forum in Bucharest dedicated to the data center industry in the region.

According to the EMEA Data Center 2024 report published by the real estate consulting firm JLL, secondary markets in Europe, including Spain, Poland, and Romania, are expected to grow by an average of about 49 percent, while the central FLAPD area (Frankfurt, London, Amsterdam, Paris, Dublin) will not exceed 16 percent. Furthermore, the same report shows that market growth in Southern Europe is expected to be between 30 and 55 percent in the coming year.

The widespread adoption of artificial intelligence and cognitive processes is creating unprecedented demand for data center capacity, which is emerging not only in mature markets in the West but also in secondary or emerging markets, including Romania. The report also highlights that investments in the data center industry in 2023 doubled compared to the previous year, totaling 2.34 billion euros across Europe.

– The entire Southern European data center market is booming. Bucharest could potentially triple or even increase the capacity of its data centers by seven or eight times in the next three years, following announcements of new large projects in the city or around the city by several investors in recent months – stated Mihai Manole, CEO of Tema Energy.

Data Centers Moving from North to South

The capital of Romania ranks ninth in the developing EMEA markets (Europe, Middle East, and Africa), with data centers totaling 15 megawatts, according to the 2023 report published by the real estate consulting firm Knight Frank. However, projects already in development could increase this capacity to at least 50 to 55 megawatts in a relatively short time. Last year, several major players announced their intentions and started projects to build large data centers in Bucharest, primarily due to easy access to communication lines, the electrical grid, and qualified personnel.

When it comes to data centers, the capital of Croatia is not lagging behind the Southeast European region. As we recently wrote in Lider, Croatia is becoming one of the key destinations for data centers in Europe. Similar to Bucharest, Zagreb is expected to experience consistent growth in the data center market in the coming years, according to Tema Energy.

Most international analysts believe that the dramatic reduction in available space and power in data centers in highly developed countries with data centers (United Kingdom, France, Netherlands, Germany, Ireland) will lead more and more investors to turn to secondary markets in Eastern Europe and Scandinavia. Thus, long-standing data center hubs in Frankfurt, London, Amsterdam, Dublin, and Paris are slowly moving to the center and to the east and south of Europe. For example, the Croatian branch of the American Digital Realty near Zagreb is building a new data center that will be the largest in Croatia with a capacity of 30 megawatts. Although there are no exact data on the current capacity of all data centers in Croatia, industry experts estimate that it is currently between five and ten megawatts.

However, the southeastern hub of Europe for connecting with the Middle East should be Greece – from Athens to the Middle East and from Crete to Africa. The Greek capital already has the largest IT capacity in the region, totaling 101 megawatts, and this number will soon increase as the wider area of Athens has been chosen by none other than Microsoft for its three new data centers, in which it will invest approximately 976 million euros.

A similar situation exists in Sofia. The entire data center market in Bulgaria is expected to grow by 6.96 percent from 2024 to 2028, reaching a market volume of 201.7 million dollars.

In France, for example, there are already submarine cables to Africa from Marseille, and besides the mentioned countries, Milan in Italy, Madrid in Spain, and Vienna in Austria have recently become significant for data centers.

– Therefore, in the next two years, major investments will be directed to places where land, energy, and human resource costs are lower, but where there are also efficient communication nodes, sufficient (green) electricity, and technical capabilities to build and manage large data centers – conclude Tema Energy.