Frenetic data centre growth ‘could come crashing down’ if constraints aren’t addressed

That’s one of the key messages from a report on the global data centre market from insurance firm Allianz Commercial.

A concept render of Project Jupiter, a proposed US$165 billion AI and data centre complex in New Mexico, US. Image: BorderPlex Digital Assets

The high demand for computing power for artificial intelligence (AI) and cloud computing has sparked a global building boom for data centre facilities. One study by McKinsey estimated that as much as US$7 trillion could be spent on data centres globally by 2030, with major ‘hyperscalers’ like Amazon, Microsoft and Google Cloud leading the way.

The US alone invested $74 billion in data centre construction in 2024 but growth is happening worldwide, with Beijing generating around 10% of global hypersale capacity and expected to double to over 8GW by 2030. Asia-Pacific had 3.2GW under construction, and 13.3GW planned as of early 20256.

Europe is also seeing growth, with a 43% annual increase in pipeline activity.

But Allianz’s report questioned whether the building boom can last in the face of several factors limiting growth.

It pointed to rapidly escalating construction costs, with average-sized facilities now costing between $500 million and $2 billion. There are also concerns around power supply, supply chain constraints, the risk of natural disasters in the remote areas where large data centres are often placed, regulatory pressures amid concerns around environmental impacts, and opposition from local communities.

“Generative AI has become a structural driver of the global construction sector as the AI boom fuels a frenzy for data centers around the world,” said Ano Kuhanathan, head of corporate research at Allianz Trade. “In the US, vacancy rates are tightening as supply can barely keep up, despite record-high construction pipelines. Meanwhile, in China, whose data centre market is second only to the US, installed IT load is set to double from about 4.3GW in 2025 to over 8GW by 2030 as tech giants expand cloud infrastructure, equivalent to nearly $40bn in construction spending.”

“This frenetic pace of growth could come crashing down if grid power shortages, land scarcity, and regulatory moratoria are not addressed,” he added.

Nonetheless, the report added that there “no clear signs” that the growth in data centres has reached its peak.

Darren Tasker, head of construction, Americas, at Allianz Commercial, said, “Future demand for AI is difficult to gauge, due to rapid technological advances and various barriers to widescale roll-out. This has led some commentators to voice fears about a bubble, over-investment, and the prospect of stranded assets.”

Read the full report here.