Data centres are crucial to future economic prosperity. Here’s why… 

When ChatGPT launched in November 2022, most people with an interest in generative artificial intelligence (GenAI) suspected we had reached an era-defining milestone. Even so, I don’t think many could have predicted just how pervasive this technology would become or how quickly it would spread. 

In August of last year, analysts at the Centre for Economic Policy Research (CEPR) conducted a study into GenAI adoption in the United States. The team found that nearly a third (32%) of respondents made use of the technology at least once in the week prior to the survey, and more than one in ten (11%) had used it every workday that week. These are eye-catching statistics, and I’d be shocked if the numbers hadn’t climbed further in the six months since this data was gathered. 

Thanks to GenAI’s meteoric rise, the worldwide requirement for computational horsepower has never been greater, which is why DAMAC Group’s EDGNEX recently outlined plans to invest a minimum of $20 billion in the US data centre market (more on that later). And it’s not only a question of brute force; the latest AI innovations are simultaneously driving demand for increasingly sophisticated digital infrastructure. 

In this month’s blog, I’ll outline why I believe this sector represents one of the cornerstones of future economic prosperity. 

Matching capacity with demand 

Before we take a deep dive into this fascinating industry, let’s answer two fundamental questions: what are data centres and why do they matter? These facilities house extensive computer systems, which support centralised and secure information technology (IT) operations, telecommunication servers, cloud computing, website hosting, and much more. They also deliver the processing power required to train, refine and operate the latest GenAI platforms. 

Naturally, as the use of these applications accelerates, so too will the need for facilities capable of powering them. Analysis conducted by McKinsey & Company suggests that the requirement for AI-ready data centre capacity will increase by an average of 33% per year until the end of the current decade. 

Meeting this level of demand will require development on an unprecedented – or ‘hyper’ – scale, so it’s no surprise that hyperscale data centres are becoming more prevalent. These facilities house the types of advanced systems required for mammoth cloud computing and networking applications (think Google Cloud or Microsoft Azure). The hyperscale segment’s global market value looks set to exceed $935 billion within the next seven years, representing an astounding compound annual growth rate (CAGR) of 27.9% during the period 2023-32. 

From every perspective, data centres represent an attractive investment opportunity. So, what steps are global business leaders taking to secure a foothold in this industry-critical and immensely lucrative market? 

Investing in future infrastructure 

To date, more than 10,000 data centres have been built worldwide. In terms of sheer volume, the US is leading its global counterparts by a significant margin with over 5,000 of these facilities. Also emerging as an important player in this market is the UAE, which is currently home to $1.2 billion of active data centre projects and a future pipeline worth $433 million. 

At DAMAC Group, we are acutely aware of the importance of this burgeoning industry and the opportunities it presents. EDGNEX Data Centres by DAMAC – which already has operations in Finland, Greece, Indonesia, Italy, Malaysia, Saudi Arabia, Spain, Thailand, Turkey and the UAE – recently committed $20 billion worth of investment to the US market, with the potential to double this figure based on future demand. 

As I have mentioned, AI is certainly an important consideration when weighing up the long-term potential of the data centre segment, but it is by no means the only factor at play. From banking and finance to education and healthcare – and everything in between – these facilities represent an incredibly attractive investment prospect due to the sheer diversity of sectors they underpin. 

Achieving a global impact 

In addition to offering appealing opportunities for private sector entities like EDGNEX, the data centre industry also has the potential to positively impact economies on a national and global level. Worldwide data centre-related revenues are projected to pass $452 billion this year, with network infrastructure accounting for more than half of the total spend. 

The US looks set to maintain its position as the global market leader, with over $137 billion of revenue anticipated in 2025, and the UAE’s data centre segment is on course to hit $1.12 billion during the same period. Yet limiting any conversation about data centres to immediate commercial opportunities would be to underplay their broader strategic impact, especially over the longer term. 

I believe that data centres will be as important to future generations as roads, railways, airports and power stations were to our parents and grandparents. Put simply, the nations and organisations that invest in these facilities today will be the global economic powerhouses of tomorrow.