Thursday, November 23, 2017

5 major finance and investment lessons for data centre REITs, operators and investors

Here’s what investors are talking about, what the sector looks like and how an emerging African market is promising business to international developers.

Every week that goes by, the data centre market – be it retail, wholesale or private – keeps expanding and records are being broken all over the world.

The industry has entered a cycle in which the thirst for connected services and devices is driving the growth of the data centre economy, which in its turn is enabling further advancements in digital, which circles back to the need for more data centres.

2017 has been labeled as the year of multi-cloud convergence, the year when serverless architectures take over, and the year when the edge will no longer generate ‘dizziness’ amongst operators.

Building on this, hundreds of data centre experts, from analysts to investors, to operators, and other key figures of the industry, gathered in London in January for the tenth edition of Finance and Investment Forum.

Data Economy runs five of the major key points from the conference.


1. Europe 1-2 years behind US market

The European data centre market is one to two years behind the industry in the US, according to Jennifer Fritzsche, managing director at Wells Fargo Securities.

However, Fritzsche said that “all eyes will remain on Europe” over the coming months in regards to how the market develops and grows.

She said: ” With the merger of the Equinix and Telecity and Digital Realty Trust’s purchase of some Equinix/Telecity data centres, there has been considerable focus on European M&A.

“In our view, Europe is one to two years behind the US in terms of enterprise outsourcing and cloud adoption.

“We follow many of the fiber companies who we consider to be a key part of the supply chain for data centers, and they are especially excited about the European opportunity.”

Fritzsche continued to say that as Equinix is the largest player in the market, this should help others who “draft” off their interconnection pricing, hitting that Interxion has already benefited from this.”

“In addition to solid macro demand drivers, the merger of two large companies (Equinix/Telecity) with very different cultures and other companies (for example, Digital Realty) lacking a deep presence in some important markets, creates more of an opportunity for some other others players (namely Interxion) to gain share, in our view.”

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