UK data centre market continues to progress

Improving sentiment: A woman walks opposite the Houses of Parliament in central London. Concerns that companies may relocate from the UK to Europe on Brexit worries seem to be dissipating. — AFP

LONDON: Fears the UK’s data centre operators would shift their infrastructure abroad because of Brexit are looking unfounded, with several firms and industry experts saying they’ve seen domestic growth since 2016.

London’s data centre market had a total supply of 711 megawatts during the second quarter of 2020 and is expected to end the year with 67 additional megawatts of capacity than the year before, according to data compiled by CBRE Group Inc.

The industry saw record expansion in 2019 when 145 megawatts of capacity was added. Limited construction and site access for upgrades during the pandemic this year has been blamed in part for the recent slowdown.

Concerns that companies may relocate from the UK to Europe heightened last year after one of Britain’s biggest gambling companies, GVC Holdings Plc, moved the servers hosting its online betting platforms to Ireland.

At the time, a spokesperson for industry lobby group UK Finance also sounded the alarm that banks were considering relocation to avoid problematic cross-border transfers of personal data. Movement of data generates £174bil (US$216bil) of value in the UK, according to the Confederation of British Industry.

Emma Fryer, associate director of data centres at industry body TechUK, said the reality has been less dramatic.

“The market has been very buoyant, with record levels of construction, record uptake of space and record size contracts, ” she said. TechUK estimates that a typical modern data centre can cost more than £100mil to build and fit out.

Synergy Research Group chief analyst John Dinsdale said that over the next five years “the number of operational hyperscale data centres in Europe will grow at eight to 10% per year and we expect UK growth to be in the same range.”

Dinsdale said these so-called hyperscale sites include those owned and operated by the biggest cloud-computing providers in the UK, such as Microsoft Corp, Inc and Alphabet Inc’s Google. They, along with their peers, now have 26 major facilities in the UK, up from 14 in 2016 prior to the Brexit referendum, he said.

Demand for UK-based sites has been driven by enterprise cloud and software-as-a-service utilities – such as office productivity and file storage – as well as e-commerce, social networking, search, streaming video services, gaming and mobile apps.

Dinsdale said the UK has also remained the largest market in Europe for colocation data centres, a less costly alternative to expensive dedicated premises. These facilities lease shared space in purpose-built warehouses to multiple third-parties and provide the technology to run it. The four largest colocation markets in Europe are known as FLAP – an acronym of Frankfurt, London, Amsterdam and Paris.

“The UK is by far the largest co-location market in Europe, a long way ahead of Germany, which is itself a long way ahead of France and the Netherlands, ” Dinsdale said.

“Brexit has had an impact, but it was somewhat muted in relation to the bigger story of aggressive growth in cloud and cloud-supported services.” Ireland is proving competitive, however, with some of the industry now calling the leading co-location centres FLAP-D.

Amazon, Google and Microsoft all have operations in Ireland. — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Data centre , UK , progress , Brexit , growth ,


Did you find this article insightful?


Next In Business News

Car chip shortage clouds KESM outlook after strong Q2
FBM KLCI closes at highest in nearly 2 months
CIMB Investment Bank named Malaysia Bond House of the Year
Vodafone seeks to raise up to 2.8bil euros from Towers IPO
Sultan Nazrin: Islamic capital market proved resilient during pandemic
Worst-performing Asia stock index turns winner on value love
Top Glove posts highest quarterly net profit in corporate history at RM2.9bil
Flexidynamic to raise RM15m from IPO
Serba Dinamik secures RM408.8m contracts in India and Indonesia
Investors continue rotation into recovery plays

Stories You'll Enjoy