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Staff Writer

Key factors shaping data centre expansion in South Africa



Cushman & Wakefield | BROL reports a notable trend among data centre operators, who are increasingly seeking sites to the north and east of Johannesburg, focusing on well-positioned nodes with reliable power supply.


Meanwhile, the Cape Town market sees a rise in data centre expansion, with growing interest observed in Nigeria and Kenya.


The surge in AI technology deployment and the rising demand for efficient cloud storage are driving global data centre growth.


Notably, the northern and eastern regions of Johannesburg emerge as preferred locations for major data centre operators, underlining South Africa's significance in the global data centre landscape.


Areas like Midrand, Samrand, Isando, and along the R21 highway already host a considerable concentration of data centres, with prominent operators including Africa Data Centres, BCX, NTT, Vantage, and Teraco.


Accessible land is a key attraction for large data centre operators, but the availability of electricity plays a critical role in location selection.


"Prime, well-positioned land close to existing infrastructure, including upgraded power substations, attracts operators as these sites have lower power costs,” said Calvin Crick, MD of Transaction Services at Cushman & Wakefield | BROLl."


Crick added that the distance of a site from electrical substations directly impacts the amount operators spend on infrastructure upgrades to the electricity system, which ultimately cede to municipalities. In fact, in some instances, the cost of securing electricity surpasses the cost of acquiring land.


The 2024 Global Data Centre Market Comparison by Cushman & Wakefield highlights power availability as a paramount concern globally, leading operators to explore untapped markets.


Johannesburg stands out as the sole African city in the top 10 established data centre markets in the Europe, Middle East, and Africa (EMEA) region, while Lagos is the only African city listed in the top 10 emerging data centre markets.


Angus Murray, Head of Tenant Representation for Transaction Services at Cushman & Wakefield | BRO, said a higher-for-longer interest rate environment globally has reduced interest in new data centres, especially in emerging markets, compared to 18 to 24 months ago.


“Many operators are ‘sticking to their knitting’ in their core markets. We expect that a reduction in interest rates will result in renewed demand for new data centres across Africa, albeit off a low base,” said Murray.


However, existing operators in South Africa, including Africa Data Centres, Teraco and Vantage Data Centres, continue to grow and expand.


Despite macro-economic challenges impacting growth in South Africa, the demand for digital infrastructure remains strong, driving providers to explore alternative power sources and develop new solutions to support data centre expansion.


In Cape Town, where land availability is limited and electricity infrastructure is better, smaller deployments are common compared to Johannesburg. However, new data centre projects are underway, especially in areas like Brackengate.


Outside South Africa, emerging African markets are dominated by smaller operators and local players, while global players show interest in countries like Kenya and Nigeria, offering a range of data storage solutions from basic to complex cloud computing.


Overall, despite challenges, the data centre landscape in Africa continues to evolve, with growth opportunities emerging in both established and emerging markets.

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