How Southern Europe is emerging as the next growth hub for data center development, digital infrastructure, and hyperscale investment
Europe’s data centre story has long been about the FLAPD giants – Frankfurt, London, Amsterdam, Paris and Dublin. But the focus is moving. With land, grid and permitting increasingly constrained in core hubs, Europe’s digital buildout is moving where power, space and regulation line up: the sunny south.
Pipeline powerhouses: Spain, Portugal and the rise of the southern crescent
FLAPD still matters, but growth is redistributing. Major developers and hyperscalers are now sizing up Spain, Portugal, Italy and Greece as attractive next-wave markets. Madrid and Lisbon have become the focal points for large campus-style builds and Greenfield projects. Governments in the region are actively courting investment with fast-track permits, tax incentives and dedicated “digital infrastructure” zones.
Portugal’s Start Campus in Sines has been promoted as an AI-ready, large-scale campus and other sizeable projects are underway across the Iberian Peninsula and into Italy and Greece. These southern markets often win on two counts: faster grid connection times (for available parcels) and competitive renewable energy supply. This is a powerful combination as Scope-2 disclosure and sustainability become dealbreakers for institutional capital and hyperscalers.
Why the South now?
Several practical drivers are pushing capital and cloud deployments south:
- Power-ready land: Mature hubs are increasingly land-constrained and can face 7–10 year waits for new grid allocations. Southern markets currently offer more immediately usable, power-ready parcels.
- Renewables and sustainability: Iberian and southern sites can tap abundant renewable supply, helping operators reduce Scope-2 footprints – an increasingly non-negotiable requirement from tenants and investors.
- Proactive policy: National and regional incentives, alongside streamlined permitting in parts of Spain, Portugal and Italy, lower the friction for rapid campus rollouts.
Risks – because data centres investing isn’t a simple gold rush
The upside is obvious, but investors must respect the downside:
- Grid fragility: Local networks can be quickly stretched if multiple hyperscale projects proceed in parallel. Upgrades are expensive and sometimes slow.
- Environmental and regulatory complexity: European rules on water use, waste heat and land sustainability are tightening. Projects must be designed to comply or risk delays and extra capex.
- Demand volatility: AI and cloud demand is large but lumpy; speculative builds.
- without pre-commitments can sit underutilised if tenant timing changes.
How to play it
The winning strategy is practical and on the ground:
- Secure power-ready, zoned sites rather than raw land. Permits plus hard energy allocations are the real asset.
- Lock energy supply early – long lead times for grid upgrades mean early contracting or embedded generation can be decisive.
- Partner locally – boots on the ground, relationships with regulators, and sovereign or municipal partners accelerate timelines and reduce execution risk.
The bottom line
Southern Europe is not a niche bet, it’s the pragmatic next phase of Europe’s data-centre buildout. Lisbon, Madrid, Milan and Athens now sit squarely on the watchlists of hyperscalers and institutional investors. The race is on to turn southern promise into power – both literally and financially. The teams that combine early site control, energy certainty and regulatory fluency will capture the most value.
Looking to invest in land for data centres in Portugal or Southern Europe?
Our team at Bravura Investments specialises in sourcing power-ready, zoned land ideal for data centre development. Whether you’re a hyperscaler, infrastructure fund or developer, we can help you find the right plot and navigate local permitting and energy considerations.
Contact us today to discuss available opportunities across Portugal and Southern Europe.
Stay tuned for Part 3, where we’ll dissect the policy shifts, sustainability tradeoffs and who’s building what (and where) in the next 18 months.
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Sources:
- CBRE: Global Data Centre Trends / European outlook
- Newmark: 2025 Data Center Site Selection Dynamics
- Cushman & Wakefield: H1 2025 EMEA Data Centre Market Update
- Ember Energy: EU AI & grids analysis
- European Data Campus: Portugal