DUBLIN--(BUSINESS WIRE)--The "Latin America Data Center Construction Market - Growth, Trends, Forecasts (2020 - 2025)" report has been added to ResearchAndMarkets.com's offering.
The Latin America Data Center Construction Market is expected to register a CAGR of 7.52% during the forecast period, from 2020 to 2025.
The growth of advanced technologies such as software-defined data centers, the internet of things (IoT), and disaster recovery fed the demand for the construction of data centers in Latin America.
Data center construction is a very complex task, which requires extensive planning of electrical, location and mechanical requirements. Moreover, the data centers carry out mission tasks due to which any imperfection in power management to building design could be catastrophic and could result in increased cost to the companies.
The need for data centers has increased in the recent years, with 2017 being the significant year due to the high adoption of cloud services. During that period, widespread expansion of the cloud services was restrained by the limited storage available at the datacenters.
Subsequently, the concept of hyperscale datacenters and colocation data centers emerged. The construction of hyperscale data centers and colocations data centers is expected to drive the demand for data center construction in the future.
The rapid proliferation of mobile devices and high-speed broadband connectivity is attributing to the growth of the data center construction market in the Latin American region. Moreover, the increasing demand for connected devices and the introduction of new technologies, such as IoT, cloud-based services, and big data analytics is boosting the demand for new facilities in the region.
The increasing investment in building new data centers in Latin American countries, such as Brazil, is expected to drive the market growth over the forecast period. In August 2019, Brazilian company AMT (Agencia Moderna Tecnologia), selected CenturyLink to meet its growing demand for cloud services as part of business expansion with management systems provider Sankhya for data center services in Rio de Janerio. The CenturyLink modular data center in Rio de Janeiro provides customers with a processing environment designed to offer high levels of availability, improved quality, and greater access speeds to the rest of the world.
The investments in datacenters and advanced information processing structures have accelerated in Latin America, despite the COVID-19 crisis. Various companies in the market have announced their moves for construction of data centers.
Key Market Trends
IT and Telecommunications Segment to Hold a Significant Share of the Market
- The region is undergoing some massive investment from IT & Telecom providers. For instance, Digital Colony Management has announced the establishment of Scala Data Centres, a hyperscale data center platform headquartered in Sao Paulo, Brazil. Scala is Digital Colony Management, LLC's second investment in Brazil and fourth in Latin America, after acquiring Highline do Brasil in 2019, Andean Telecom Partners in 2017 and Mexico Towers Partners in 2013 through its subsidiary Digital Bridge.
- The massive adoption of cloud computing, IoT services, and big data, along with the growth in social networking and the need for online video services, has aided telecommunication service providers in the region to establish their internet backbone. In 2019, Google docked its private submarine cable, Curie, in Valparaiso, Chile. The cable is directly joined to the Equinix LA4 data center in Los Angeles, California. About 10 submarine cable projects anticipated to be operational by 2021, will yield high data center investments year-over-year.
- The data centers in Latin America are being designed to withstand high rack density. The increasing utilization of IT infrastructure has increased the rack power density to an average of 4-6 kW among data centers in Latin America. The growing need for solutions such as high-performance computing (HPC) and virtualization will continue to grow the rack power density between 8-10 kW during the forecast period, consequently driving the data center construction market in Latin America.
- Owing to mergers and acquisitions, the increase in the market share of IT & Telecom companies are also rising sharply in Latin America.
Competitive Landscape
Sustainable competing advantage can be accomplished through innovation in this market, owing to the increasing need for differentiated products for multiple applications. Through research & development, mergers & acquisitions, and strategic partnerships, they have been able to gain a stronger hold in the market. These players are continually expanding their presence in the market by offering the most advanced technologies, thereby boosting their revenues in the market.
Market Dynamics
Market Drivers
- Growth in Network Connectivity and Increased Adoption of Digital Transformation Related Technologies in the Region
- Favorable tax Incentive Structure Introduced by Local Governments has Led to the Higher Participation from International Players
- Ongoing Consolidation Efforts by Major Data Center Construction Companies to Aid their Expansion Activities
- Growing Awareness on Modular Deployments and Increasing Rack Density
Market Challenges
- Cost and infrastructural concerns
- Cost and Infrastructural Concerns Continue to be a Concern
- Workforce-related Challenges
Market Opportunities
- Technological Advancements in Power, Cooling & Energy Segments to Drive Construction Activity
- Growing Demand for Edge Data Center Deployments
- Brazil & Mexico to Continue their Emergence as the Largest Markets in the Region
Impact of COVID-19 on the Data center Construction Industry
Industry Attractiveness -Porter's Five Forces Analysis
Technology Snapshot
Companies Mentioned
- Turner Construction Co.
- DPR Construction Inc.
- Fortis Construction
- ZFB Group
- Aceco TI
- AECOM Limited
- Constructora Sudamericana S.A
- HostDime Brasil
- CyrusOne Inc.
- RITTAL Sistemas Eletromecanicos Ltda. (Rittal GmbH & Co. KG)
- Legrand
- Delta Group
- Ascenty Data Centers E Telecomunicacoes
- Equnix Inc.
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