On the 23rd and 24th of September, Iberian Property brought to Estoril the 8th edition of the Portugal Real Estate Summit, where the global property sector was well represented by almost 500 industry leaders from over 20 countries, making this the most attended edition ever.
In an interview conducted by William Kistler, Founder & Managing Partner of UrbanOvation, the representatives of Merlin Properties and of IBM showcased how Artificial Intelligence (AI) and data centers are rapidly transforming global digital infrastructure, with Portugal and Spain becoming central to this growth.
Ricardo Martinho, Chairman of IBM Portugal, highlighted that the new information models have revolutionized AI, increasing the need for both storage and computing capacity. “Cloud storage was already a huge innovation, but if you think it truly the information does not go up to the sky…the cloud is a gathering of data centre units, so physical space. And AI is boosting this need for space, and it’s not only companies who drive it, even as individuals when we watch streaming shows for example, we are pushing this demand”, Ricardo Martinho noted.
Merlin Properties, with 60 MW of operational data centers, is the leading investor in this sector in Iberia, and it has an additional 200 MW under development, including 52 MW set to be delivered in Vila Franca de Xira (Lisbon). However, as David Brush, Senior Advisor at Merlin Properties pointed out, these figures are just the beginning. The U.S. has 41 MW of data center capacity for every 1 million people, while Europe lags behind with only 16 MW. Since a large portion of European data is still stored in the U.S. and security policies require this data to be relocated back to Europe, the current data center development pipeline isn’t addressing potential growth – it’s merely catching up to a significant supply shortfall.
Regarding the strategic advantages on the data centres industry for Spain and Portugal, David Brush emphasized that fiber optic connectivity and affordable energy costs are key factors for attracting investment. “The region's proximity to submarine cables landing in ports like Lisbon, Barcelona, and Bilbao provides a strategic advantage for data transmission. Additionally, Iberia's competitive energy prices, the lowest in Europe and mostly fuelled by renewables, make it the perfect location” he stated.
As AI applications require far more power than traditional computing systems, the need for advanced cooling technologies is becoming critical to efficiently manage the power demands and increasing the cost and complexity of building ai-optimized data centres.
"Developing a 50 MW data centre can easily cost up to 500 million euros"
According to David Brush, designing a data centre for AI can cost between 10 to 11 million euros per megawatt. He notes that while a 25 MW building was once considered sufficient, companies now demand facilities with capacities of 50 MW or more, representing investments of up to 500 million euros.
Large tech companies like Google are leading this charge, with demands for 100 MW data centres, in other words, a billion-euro investment. Thus, the barriers to entry in this market are steep, requiring specialized expertise and access to significant capital. “While the physical "box" of a data centre may resemble a traditional warehouse, it is the complex mechanisms that allow it to operate efficiently, such as advanced cooling systems and uninterrupted power sources, that drive up costs”, David Brush explained.
A full Special Story on the Portugal Real Estate Summit 2024 can be read HERE.
