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Data centers mark hot spot in real estate map despite environmental issues

Μarket officials point out that interest in data centers has grown rapidly over the last five years and that they are now among the top picks for real estate investors looking for steady returns. As data centre migration is a highly complex process, tenants usually occupy the premise for a long period, generally for approximately 10+ years. Hence, the sector offers a long-term income stream and security, according to Saviils. 

Data centers have become one of the hottest segments of the global real estate market amidst the pandemic, despite the significant environmental challenges faced by the projects.These investments, such as the one recently announced by Microsoft for Attica, also, however, often draw strong opposition from local communities, due to their huge energy needs and water usage. 

Μarket officials point out that interest in data centers has grown rapidly over the last five years and that they are now among the top picks for real estate investors looking for steady returns. As data centre migration is a highly complex process, tenants usually occupy the premise for a long period, generally for approximately 10+ years. Hence, the sector offers a long-term income stream and security, according to Saviils. 

Οlivier Micheli, president and CEO of DATA4, a company that operates 19 data centers (DC) across Europe, plans to significantly increase its projects on its current campuses in France, Spain and Italy, while expanding into Germany, Central Europe and Scandinavia“We expect to double the number of DCs, with 20 extra DC’s at least. 12 are already under way,” he tells Business Daily. 

On the downside, however, large barriers to market entry restrict the flow of private capital into the sector. “Firstly, particularly high infrastructure costs mean that data centres are expensive to build. Secondly, for non-specialists, they are also complex to manage and require scale to achieve profitability. Thirdly, due to the speed of technological development, obsolescence is another concern involving expensive maintenance and upgrading costs,” says Savills in a report. 

The pandemic and the acceleration of the global economy’s digital transformation has made it necessary to boost computing power, increasing the demand for digital clouds, and consequently investment in data centers. According to market figures, data centers have absorbed $100 billion in the last decade. But their environmental footprint is a crucial issue, especially when it comes to the first generation of data centers. Consuming 3% of the world's electricity supply (which accounting for about 2% of total greenhouse gas emissions), data centers are estimated to have the same carbon footprint as the aviation industry. 

By 2040, digital data storage is expected to account for 14% of global emissions, about the same as that produced in the US today. 

Meanwhile, they continue to consume huge amounts of electricity from national grids. Companies, such as Google, have installed diesel generators to provide backup power to data centers in the event of a power outage. In December, however, Google announced that it would replace some of its diesel generators with back-up batteries at its data center in Saint-Ghislain, Belgium, in a big step for the company. In Europe, tougher environmental rules are being introduced, while some key players are committing to carbon neutral goals. However, opposition from local residents often continues. In the Netherlands, there have been strong reactions to a new data center in the Zeewolde region, with the country's parliament recently ordering an inquiry into the energy consumption of existing and newly planned data centers. 

Residents have also protested plans for new data centers in Illinois (USA) and Kent (USA), as well as Luxembourg. 

In Bissen, in the heart of Luxembourg, residents say the jobs that will be created by a Google data center (which would require 12% of the country's electricity) will be minimal, adding that there is a shortage transparency for the project. 

14 in Greece 

In Greece, there are 14 data centers, according to datacentermap.com, located in Athens, Thessaloniki, Volos and Chania. 

A significant acquisition in the sector took place in November when Lamda Hellix,  a leading colocation and interconnection provider in the region, was acquired by US group Digital Realty. 

One month earlier, in October, Microsoft announced that it would proceed with the creation of the first data center complex in Greece. Despite public celebrations from the government and Microsoft on the planned investment, little is known about what exactly it involves. 

No information has been provided on where it will be built, nor the number of employees that will work there. It is expected to start operating at the end of next year in an investment reaching some 400 million euros. 

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