The rapid growth of artificial intelligence and cloud computing is driving a global construction surge for data centres with some projects now costing more than $20bn, according to a new report from German insurance and asset management company Allianz Commercial.
Demand for high-performance computing power has prompted developers to build facilities on an unprecedented scale, with up to $7tn expected to be spent on data centre construction worldwide by 2030, driven largely by US and Chinese technology companies.
The three dominant cloud providers – Amazon, Microsoft and Google Cloud – accounted for nearly two-thirds of global cloud revenue in the second quarter of 2025.
Chinese groups such as Alibaba and Tencent are also ramping up investment, with combined capital spending reaching hundreds of billions of dollars this year. Much of that funding is going into large-scale infrastructure and dependable energy sources needed for AI workloads.
“Construction projects as complex and extensive as data centres require significant time and resources,” says Darren Tasker, head of construction, Americas, at Allianz Commercial, in a press release. “They typically need project-specific policies because of their size and unique risk profile.”
Data centres drive building boom
The US remains the largest market for data centres, expected to cover about two-thirds of total global data centre power demand – around 81 gigawatts by 2028.
China’s market is expanding rapidly, with Greater Beijing alone now accounting for roughly 10% of global hyperscale capacity.
Europe trails behind the US and China but is seeing strong momentum, with pipeline activity up 43% year-on-year. London and Dublin each exceed 1 gigawatt in capacity, followed by Amsterdam, Frankfurt, Paris and Milan.
“A $20bn facility can involve tens of thousands of workers at peak times,” says Chris Fancher, US head of construction and property at Allianz Commercial. “Tight schedules and complex logistics mean any delays or faulty workmanship can lead to significant losses.”
Rising costs, rising risks
Construction costs for data centres have surged in recent years, climbing from an average of $200m to $300m to between $500m and $2bn, with some mega-projects exceeding $20bn.
The energy demands of AI and cloud infrastructure are also intensifying. Global electricity use from data centres is forecast to more than double by 2030 to around 945 terawatt hours – roughly equivalent to Japan’s total consumption today.
To manage power constraints, operators are increasingly turning to on-site generation, including renewables, gas and potentially small nuclear reactors.
Fire, heat and water use remain major risks. Large data centres can consume up to 19m litres of water per day, equivalent to the needs of a town of 50,000 people. Rising global temperatures could threaten the resilience of more than half of the world’s leading data centre hubs, Allianz said.
“There are no clear signs that growth has peaked, but the industry faces several challenges,” says Tasker. “The pace of AI development and rising costs could lead to over-investment or stranded assets.
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