Insight

The future of data centres and what it means for construction insurance

Published

06 March 2025

Read time

4 minutes

With the growth of the digital economy and widespread use of AI, the demand for data centres is at an all time high, and is expected to continue for years to come. With this in mind, we explore some key trends, and what they mean for the construction insurance industry.

1.	Investment in Data Centres
	Annual global data centre investment is expected to surpass $1 trillion within the coming years, driven by AI, cloud computing, and digital transformation¹. Investors are pouring capital into new developments to meet growing demand, making data centres one of the fastest-growing asset classes in real estate.
2.	Growth in Hyperscale Data Centres
	The number of hyperscale data centres (large-scale cloud facilities) surpassed 1,000 in 2024. This is forecasted to double every four years².This explosion in hyperscale facilities will in turn increase power and land demand, pushing governments and developers to plan new projects strategically.
3.	Construction and Infrastructure Requirements
	The average cost to build a hyperscale data centre can be between $500 million and $1 billion. However, some top-tier facilities can exceed $2 billion³. The scale and complexity of these projects require specialised contractors, supply chain coordination, and innovative construction techniques such as prefabrication.
4.	Rising Energy Consumption
	Data centres currently consume 2% of global electricity⁴, but AI-driven demand could significantly increase this consumption up to 9% by 2030⁵. This puts pressure on grid capacity, renewable energy investments, and sustainable power solutions to keep operations efficient and carbon-neutral.
5.	Sustainability and Green Data Centres
	There is a significant shift to ensuring that data centres are powered by renewable energy or carbon-neutral solutions. Tech giants like Google, Microsoft, and AWS are pushing for net-zero carbon data centres, leading to heavy investment in solar, wind, and battery storage projects.
6.	Water Consumption and Cooling Innovations
	A single mid-sized data centre consumes around 300,000 gallons of water daily, equivalent to the daily usage of approximately 1,000 U.S. homes⁶. This is pushing demand for water-efficient cooling technologies. This drives investment in liquid cooling, immersion cooling, and water-recycling solutions to make data centres more sustainable.
7.	AI and High-Density Data Centres
	Experts believe that AI-driven workloads require 60kW or more per rack, compared to traditional cloud workloads⁷. This shift is forcing data centre operators to redesign cooling systems, increase rack density, and invest in new semiconductor technologies.
8.	Geographic Expansion of Data Centres
	The fastest-growing data centre markets include Virginia (US), Frankfurt (Germany), Mumbai (India), and Tel Aviv (Israel) due to increasing cloud and AI adoption. New data centres are emerging in non-traditional markets, requiring investment in land, infrastructure, and energy supply.

What does this mean for construction insurance?

Considering the above, data centres can present significant opportunities to the construction insurance market. However, they also present unique risks, and the appetite for such projects is sometimes variable as a result.

From the design and construction of the building itself to the extensive installation, testing and commission of the high value data processing equipment, the risk profile can shift significantly throughout the development period. It is essential that the insurance programme covering this period is designed to be robust enough to cater for the varying risks and contracting parties involved. Understanding of the project risks and proper communication of the management and mitigation of such risks is a key issue when considering an insurance market approach.