New data centers are being built at a faster rate than any other real estate asset class globally, data from JLL’s Global Real Estate Outlook shows.

Completions are set to reach a new peak globally in 2025, exceeding the previous four years. Yet with capacity on track to grow at a 15% CAGR over the next two years, demand for critical data center infrastructure continues to outstrip supply.

A confluence of positive market conditions is fueling the pace of growth in these secondary markets, says Daniel Thorpe, Head of EMEA Data Center Research, JLL.

“The growth of digital economies is a clear driver, but supportive government policies and enhanced subsea cable connectivity are also crucial factors driving demand,” he says.

In many emerging markets, the launch of new subsea cables will significantly enhance connectivity with other regions, potentially attracting global data center operators.

A prime example is South Korea, where the data center market has traditionally been dominated by local conglomerates. “Interest from foreign operators grew alongside the increase in subsea cable connections, boosting connectivity into its digital economy,” says Duncan.

Other countries are poised to reap similar benefits. Spain boasts major subsea cables connecting it to Europe, Africa, Asia, and most recently the US with the Meta-owned Anjana subsea cable. In India, three major subsea cable projects are expected to become operational this year, positioning Mumbai as a major hub connecting countries across Africa, the Middle East, and Asia.

Government initiatives to strengthen digital infrastructure are also spurring growth.

The UK government, for instance, recently unveiled a new AI action plan that includes the creation of ‘AI growth zones’ to expedite planning proposals for data centers. Last October, Malaysia introduced guidelines to standardize and streamline the application and approval process for data center development.

But the scarcity of vital resources including power and land, could become a bottleneck to closing the demand-supply gap of data centers. This scarcity is forcing hyperscalers to adapt their strategies.

“Hyperscalers have long engaged in land banking, typically with a focus on long-term capacity needs,” says Thorpe. “However, this practice appears to be accelerating, with the focus shifting towards acquiring land for quicker development to meet the pressing need for speed to market.”