Global data centre construction market to hit £24bn by 2027
The global market for data centre construction is estimated to be worth £15 billion in the year 2020, and projected to reach a revised size of £24 billion by the year 2027, growing at a CAGR of 6.9 percent, according to ResearchAndMarkets.com research.
In its Data Centre Construction – Global Market Trajectory and Analysis report, the sector in the US is estimated to be worth £4.42 billion in 2020, while China – the world’s second largest economy – is projected to grow to £4.18 billion by 2027, trailing a CAGR of 6.3 percent between 2020-2027.
Other noteworthy markets are Japan and Canada, each forecasted to grow at 6.6 percent and 5.4 percent respectively over the same time period. Within Europe, Germany is expected to grow at approximately 5.4 percent CAGR.
According to a forecast by Gartner, the end-user spending on data centre infrastructure is project to reach £155 billion in 2021, a six percent increase on 2020. The company says that the data centre market is still expected to grow year-over-year through 2024, despite a 10.3 percent decline in data centre spending in 2020 due to restricted cash flow during the pandemic.
“The priority for most companies in 2020 is keeping the lights on, so data centre growth is generally being pushed back until the market enters the recovery period,” says Naveen Mishra, senior research director at Gartner. “Gartner expects larger enterprise data centres sites to hit pause temporarily and then resume expansion plans later this year or early next. However, hyperscalers will continue with their global expansion plans due to continued investments in public cloud,” he adds.
Gartner adds that the impact of COVID-19 is set to prevent more than 60 percent of planned new facilities moving to the construction phase this year, which is why data centre infrastructure revenue is set to decline by 10.3 percent in 2020. However, end-user spending is expected to grow in the single digits starting from 2021.
“Much of the reduced demand in 2020 is expected to return in 2021 when staff can physically be onsite,” Mishra says. “For now, all data centre infrastructure segments will be subject to cost containment measures and enterprise buyers are expected to extend life cycles of installed equipment.”
The increased demand for cloud networking is a major driver for the data centre infrastructure market, he adds. Mishra also points out that the market is growing rapidly because of an increase in demand for servers, computers, networking equipment like routers, or switches, security components like a firewall or biometric security sensor, storage capacity, and data centre management software and applications.
In the global government and defence segment, USA, Canada, Japan, China, and Europe will drive the estimated 6.4 percent CAGR, the ResearchAndMarkets.com report adds. It points out that these regional markets account for a combined market size of £1.39 billion in 2020, but that they will reach a project size of £2.17 billion by the close of the analysis period (2020 to 2027).
“China will remain among the fastest growing in this cluster of regional markets. Led by countries such as Australia, India, and South Korea, the market in Asia-Pacific is forecast to reach £2.71 billion by the year 2027,” it concludes.
Which countries are leading the adoption of BIM?
Building Information Modelling (BIM) was first used by UK construction firms in the 1980s. Since then an increasing number of countries such as Germany, Austria, and Russia have also started to use it, but which country is leading the way?
According to research by PlanRadar, the UK, as of 2021, remains the leader in BIM implementation in construction when compared with other European nations. However, the company’s research shows that there is clear evidence other countries in close pursuit.
As part of the research into the adoption of BIM, PlanRadar examined government policy documents and conducted interviews to find out why BIM is being deployed in each country. The study also allowed the company to gauge construction professionals’ attitudes to digital technology tools in their industry, as well as explore where fast growth rates in BIM are most likely in the coming years. In addition, it looked at which governments have progressed furthest in making construction BIM mandatory.
PlanRadar says the findings are “a useful follow-up to the recently published Construction Manager BIM annual survey”, which pinpoints distinct barriers to adoption in the UK market.
While Britain has long been considered a pioneer in BIM technology, with projects such as the Heathrow Airport reconstruction, it seems that Russia is catching up. Even though its first BIM projects only appeared in 2014, PlanRadar says that the country “is on a steep upward trajectory”. According to the research, no other European country has adopted so many laws on standardisation and the mandatory implementation of BIM in the construction industry.
“Russia is arguably the most eagle-eyed nation for compliance and harnessing advanced BIM tech to drive efficiencies”, the company said.
Germany’s BIM adoption is also rapidly increasing as its government invests in BIM standardisation, skills training, and support for BIM projects, in line with its vision for the future digitalisation of the German construction sector.
PlanRadar research summary
As part of its research into the adoption of Building Information Modelling, PlanRadar has summarised each country. According to the company, here are the summaries for the UK, Germany, Russia, and France.
- The UK has the highest number of construction companies using BIM at level 2 and beyond.
- It remains the leader in the earliest use and implementation of BIM in construction projects.
- Since 2016 all state-funded projects must use at least BIM level 2, and this has led to a surge in awareness and use of BIM in the last decade. For private projects, BIM usage is advised but not mandatory.
- Currently, only 62% of small businesses in the UK actively use BIM, compared to 80% of large businesses.
- Approximately 70% of German construction companies use BIM at different levels. However, the majority are architects and design companies, making use of BIM in the design phase rather than construction and operation.
- Since 2017, BIM has been mandatory for projects worth over €100 million. And from 31st December 2020, BIM became mandatory for all public contracts relating to the building of federal infrastructure.
- BIM technology is used by very large property developers and construction companies that operate in the largest cities such as Moscow, St. Petersburg, Kazan, Ufa, Yekaterinburg.
- When it comes to legislation standardising and mandating BIM, Russia is the clear leader, and today there are 15 national standards (GOSTs) and eight sets of rules for information modelling in the country.
- From March 2022, all government projects are required to use BIM technology, and further legislation is in the pipeline.
- France does not yet have a single BIM standard enshrined in law or regulation, yet 35% of developers in France use BIM for their real estate projects.
- In addition, 50 to 60% of the leaders in the French construction market have switched to BIM, with level 2 as the most common maturity level.
- At the end of 2018, BIM Plan 2022 was launched to encourage construction participants to integrate it into their workflows. Still, construction companies have struggled to agree since there is no single approved BIM standard.
The research report concluded that the adoption of BIM is yet to reach its full potential in Europe. While the UK is currently the leader, countries such as Russia and Germany are evidently forging a clear path and have goals surrounding skills and legal frameworks. PlanRadar says that next year’s European BIM ranking “could paint a very different picture”.