A recent report by Turner & Townsend shows that data‑centre construction costs in Europe rose 13 percent year‑on‑year to an average of 10.97 euros per watt, the steepest increase worldwide. The main drivers are labour shortages and bottlenecks in electricity networks: while 52 percent of industry respondents globally consider contractor capacity sufficient, in Europe that share is only 19 percent.
High costs and constrained contractor availability mean traditional Western European hubs — London, Frankfurt, Amsterdam and Dublin — are becoming saturated and increasingly expensive for new projects. Turner & Townsend ranks Zurich as the third most expensive city after Tokyo and Osaka at 13.70 euros per watt; four Nordic capitals (Copenhagen, Oslo, Stockholm and Helsinki) also appear among the ten most costly cities. By contrast, some Asian markets such as Shanghai or Mumbai can deliver projects at around 5–6 euros per watt.
Cost examples and geographic shift
Market analyses illustrate the shift: building a typical 60‑megawatt data centre in Zurich costs roughly 822 million euros, while an equivalent facility in Warsaw can be delivered for around 553 million euros. These different cost profiles are pushing developers and investors towards secondary markets. Colliers identifies Madrid, Milan and Lisbon as gaining importance, and Turner & Townsend reports rising activity in Hungary, Bulgaria, Slovenia and Greece.
Demand drivers: AI and large transactions
The growth of artificial intelligence has materially increased compute demand. Colliers reports that European AI‑related lease volumes rose to 420 megawatts in the first half of this year from 89 megawatts the previous year. Large transactions underline investor interest: for example, atNorth’s acquisition for 3.4 billion euros by CPP Investments and Equinix is a notable deal.
Bottlenecks: network connectivity and lead times
More than half of survey respondents point to network connection as the biggest obstacle; obtaining grid connections typically takes one to two years, and in some cases longer. Even Nordic countries, which would be technically attractive due to cooler climates and cheap renewable energy, face contractor capacity shortages that limit new builds.
Investment landscape and reallocation of capital
Despite higher construction and financing costs, capital continues to seek projects that offer scale and stable returns. Data centres remain among the most sought‑after real‑estate asset classes. Capital flows are also shifting geographically: investment volumes in Poland rose by 90 percent to above 4.8 billion euros in the first nine months of the year, while Spain saw a 28 percent increase to 16.8 billion euros.
Why this matters
Rising European construction costs and constrained contractor and grid capacity will shape the availability and cost structure of digital infrastructure across the continent. The move toward Central‑Eastern European and other secondary markets creates growth opportunities for those regions but will require additional investments and network upgrades to support the new projects.
This article does not constitute investment advice. An AI assistant contributed to the preparation of this piece; the final content was edited and verified by our journalist.
