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Europe’s recognition of the strategic importance of fast, reliable connectivity
predates the pandemic and had been a focus area for more than a decade.
The digital revolution represents a shift in the way we live and work, and offers a compelling, long-term global investment opportunity. The future is digital, and the Covid-19 pandemic has both highlighted the importance of the digital transformation and accelerated its development. The digitisation of almost every aspect of our lives means that we are now reliant on the infrastructure that enables this connectivity.
Not only is there a clear path of structural growth for this asset class, as we create and consume more data, but there is also an insufficient quality and quantity of the necessary digital infrastructure needed to enable this digital transformation.
Digital infrastructure is the foundation of the digital economy, it enables the connectivity that we all enjoy and take for granted. The physical assets include data centers, macro towers and small cells.
At TGIM Assets we see potential in Tier2+ datacentres in both Build-to-core and Value-add profiles for portfolio assembly, while seeking strong & secure rent income from experienced operators and corporate occupiers as long-term anchor. We also see certain value pockets in Edge datacentres in the medium-term.
Data centres:
The European data centre sector is seeing an unprecedent rate of growth. Forecasts suggest that this acceleration of take up will continue for the next few years at least.
While COVID 19 has increased the demand for cloudservice nearly by 50%, and Brexit and GDPR requiring many companies to have DC in EU and UK, there’s a great opportunity to benefit from a first mover advantage. We see opportunity in Hyperscale & Co-location as well as Edge Data Centers.
However, COVID continues to affect the world economy and every industry is facing supply chain challenges including the data centre industry. Scarcity of supply influences pricing as huge demand is coupled with delayed new capacity leading to rising prices.
Secondary markets will continue to benefint as certain primary markets restrict power usage and as sustainability demands put pressure on the industry.
Focus on markets where there is a shortage of high-quality Hyper scale Data Center capacity with new space being built outside the main capital city area with exceptional connectivelity, taking advantage of lower land costs, readiness of power as well as easier route to sustainability.
Telecom Towers & Small cells:
Over recent years, there has been a surge in the installation of telecom towers. The telecom industry has witnessed a significant increase in demand for internet services. Globally, 5G infrastructure implementation is accelerating in industrialized countries such as the U.S., Germany, France, the U.K., and others. Private network deployments are estimated to reach over 1.56 million by 2027
