The numbers tell a compelling story. Digital infrastructure funds raised $134 billion in the first half of 2025, already surpassing the $111 billion raised across all of 2024. This surge comes during a challenging private capital fundraising environment, making the data center sector’s performance even more striking.
In our recent webinar, Investing in data centers: why investors are flocking, we examine why investors are directing record levels of capital into digital infrastructure and what this means for the future.
A new asset class comes of age
Today’s data center expansion is being compared to the dot-com build-out of the late 1990s and early 2000s. But there is one key difference: demand is visible and accelerating.
“Unlike prior bubbles, AI, streaming, gaming, Internet of Things, and cloud workloads are visibly straining existing capacity,” said Rohan Bulchandani, our Global Head of Real Estate Product and Strategy. “The demand is tangible and growing.”
With McKinsey estimating that data center capital requirements will reach $6.7 trillion by 2030, this is not just another infrastructure cycle. It is the backbone of the digital economy.
The transformation is particularly evident in the Middle East, which currently hosts 283 data centers across 17 countries. That number is expected to double by 2030.
Dr Ehab El Sambati, a partner at DLA Piper specialising in Middle Eastern markets, noted: “Unlike Western markets, which often retrofit legacy facilities, the Middle East is building from the ground up with sustainability embedded.”
Saudi Arabia’s Public Investment Fund has committed $6 billion to create one of the world’s largest ecosystems, targeting 1,300 MW of capacity. This greenfield approach enables innovations such as liquid cooling, onsite solar generation, and AI-driven energy optimisation from the start.
Power defines the investment map
Capital is not the constraint for data center development. Power is. In the US and Europe, the wait for new grid connections can be up to a decade, reshaping investment strategy.
“The focus is shifting from where capital would like to go to where power is available,” Rohan explained.
This shift is pushing investment to markets with abundant, lower-cost energy such as the Nordics, the Middle East, and parts of Africa.
Power also dominates the cost base. It is the single largest operating expense for hyperscale and co-location providers, making energy strategy a key differentiator.
Environmental performance is no longer a compliance exercise. It is a decisive factor in winning licences, customers, and capital.
Major hyperscalers are selecting partners based not just on price and reliability but also on renewable energy commitments. Regulators in many jurisdictions require green certifications for approvals. Non-compliant assets face higher financing costs and restricted exit opportunities.
As Ehab observed: “Sustainability in Middle Eastern data centers is more than compliance. It is a pathway to global competitiveness, gaining investor trust and long-term viability.”
Technology and transparency drive returns
The rapid evolution of the sector has created gaps in benchmarking. Unlike more established real estate sectors, there are no standard indices for yields or performance metrics. This has accelerated the development of monitoring and analytics tools.
We have built a performance platform that consolidate data across geographies, currencies, and languages, giving investors both portfolio-level visibility and asset-level insights. Metrics gaining traction include:
- Power usage effectiveness, with best-in-class ratios below 1.3
- Carbon intensity of power
- Water usage effectiveness, particularly in warmer regions
- Energy reuse and grid interaction flexibility
Most data center investment currently flows through private funds aimed at institutions and high-net-worth individuals. Tokenisation could broaden access, enabling smaller investors to participate while retaining the advantages of professional management.
This trend mirrors the wider shift towards digitalising alternative investments and creating new liquidity channels for infrastructure assets.
Geopolitics and domestic demand
Data sovereignty rules are driving demand for domestic capacity. Many countries now require that data processing and storage remain within their borders.
This is especially evident in Asia, where large populations, fast adoption, and linguistic diversity create unique requirements for local AI training and domestic infrastructure.
Watch the webinar on demand
Despite global uncertainties, sentiment about the sector’s long-term outlook remains positive.
As Ehab put it: “Geopolitical risks exist everywhere in the world, but the future in this part of the world remains bright.”
Data centers consistently generate EBITDA margins starting at 43% and often exceeding 50% when efficiently managed. Combined with their strategic importance to AI, digital transformation, and economic diversification, the investment fundamentals are compelling.
The question for investors is no longer if this growth continues, but how to position for it.
Watch the full webinar on demand to hear directly from our expert panel on the opportunities and challenges shaping the future of data center investment.
