3 good reason to invest in data center
19 September 2023 - Insights

3 good reason to invest in data center

Digital technology has become an integral part of our daily lives and economies, profoundly shaping the way way we interact and do business. For this reason, investing in data centers - the backbone of today's digital ecosystem - emerges as an exceptionally strategic opportunity.

In the past, a small corner of the office sufficed for hosting a company's servers used to manage operations and store data. However, as businesses increasingly rely on digital processes and services, there's a growing demand for specialized infrastructure solutions - the data centers - that can provide more space and ensure high security standards.

Data centers are specialized facilities designed to accommodate the critical IT infrastructure required for running applications and managing associated data. Businesses have two main options when it comes to utilizing these centers: they can either lease the necessary hardware or rent a space within the facility to install and remotely manage their own servers.

By examining current market dynamics, it’s evident that data centers are pivotal in today’s digital ecosystem. Moreover, they are growing at a pace that suggests stable, long-term expansion. This trend offers a lucrative avenue for those seeking alternative real estate investments.[VN1] . Specifically, there are three key reasons that make investing in data centers a savvy choice.

A strong and growing demand

With over 5 billion active users globally, the internet continuously produces a staggering amount of data. Specifically, it generates 2.5 quintillion bytes daily from activities like video streaming, online shopping, smart devices, and various automated processes. Recent forecasts suggest that by 2035, worldwide data production will soar to a mind-boggling 2,100 zettabytes.[VN2]

This is an enormous volume of data that requires increasingly sophisticated management and storage solutions, making data centers indispensable and highly demanded infrastructures. According to market analysis from ResearchAndMarkets.com, Italy stands out as one of Europe's fastest-growing data center markets, expanding at an annual average rate of 3.3% - a growth fueled by surging demand from domestic businesses. The COVID-19 pandemic has only accelerated the need for robust data infrastructures, essential for supporting video conferencing, online collaboration platforms, and other data-intensive applications.

But it's not just about the sheer volume of data being generated. Companies of all sizes are increasingly migrating their infrastructures to specialized cloud-based data centers. These solutions offer several key advantages, including enhanced security, operational efficiency, emergency recovery protocols, and substantial cost savings in management and operations.

An asset resilient to market fluctuations

Another compelling reason for investing in data centers is their ability to withstand economic downturns. This robustness provides stability and profitability, making them a rather secure investment option.

Data centers hold a key position in both corporate and governmental infrastructures, classifying them as essential assets. Consequently, they are less vulnerable to market fluctuations compared to more traditional sectors such as retail or office real estate. It’s no secret that in times of economic contraction, companies often cut their budgets, yet data management and security are generally among the last areas to face reductions, if any are made at all. This resilience makes data center investments rather resistant to recession.

Another significant advantage is the nature of contracts associated with data centers. These agreements are often set up for the long term, serving as a buffer against market fluctuations, while simultaneously ensuring a steady and reliable cash flow.

Lastly, it's important to highlight that data centers are not limited to serving just one industry. From multinationals to small businesses, a wide array of sectors depend on these facilities for their operations. This cross-industry utilization not only mitigates risks but also enhances the appeal of an already solid investment opportunity.

Growing attention to environmental sustainability

Environmental sustainability has become a non-negotiable priority on the global agenda, with both investors and consumers growing more conscious of the environmental impact of their choices. In this context, data centers - long criticized for their excessive energy consumption - are making strides towards sustainability. This shift opens up opportunities for investments in data centers that align with ESG principles, which have become key indicators for assessing an organization’s commitment to sustainability.

This ecological transformation of data centers is becoming increasingly evident, highlighted by a strong focus on adopting renewable energy sources and eco-friendly technologies. From leveraging solar and wind energy to integrating artificial intelligence for smarter energy management, these steps not only minimize environmental footprint but also reduce operational costs, making data centers all the more appealing to both investors and prospective clients.