As technology has developed and become essential to our everyday lives, demand for robust, scalable and secure digital infrastructure has also grown.
Driven primarily by data centres, logistics warehouses supporting e-commerce, mobile communication towers and network expansion, digital infrastructure is critical to our economies. It’s modern-day real estate and an attractive investment opportunity for those seeking diverse and long-term returns, as well as a steady and growing income.
Data centres: the backbone of the digital economy
At the heart of the digital transformation is data, and data centres are the critical infrastructure that supports it. They house the servers and networking equipment that store, process and manage the vast amounts of data generated by businesses and consumers.
Demand for data is surging. Whether it’s for the thousands of photos we all take on our smartphones, our connected fridges, our Ring doorbells, our Xbox games or digital banking, much of our personal lives, as well as our work lives, are all connected and using more and more data.
As data creation continues to soar, the need for robust data centre operations will only intensify, offering significant returns to investors who have invested in this space.
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The current global market capacity of data centres is approximately 59GW and is forecast to rise to around 122GW by the end of 2030, according to a recent report from Goldman Sachs.
Investors can tap into this lucrative market by focusing on both traditional, large-scale data centres and edge data centres (where data is processed closer to the source), with each having strong growth potential.
Just recently, Tritax Big Box announced that it will develop a 147MW data centre within the Slough Availability Zone; the initial phase will cost c.£365m and is expected to be completed in the second half of 2027. Separately, DC01 UK announced that it has received general planning permission for a 320MW data centre in Hertfordshire. Once completed, this will be Europe’s largest data centre.
Logistics warehouses: the heart of e-commerce growth
Online shopping has radically reshaped global commerce and consumer spending habits. Accelerated by the Covid-19 pandemic, consumer expectations have evolved, with consumers demanding fast delivery and increased availability of goods. With this uptake in e-commerce, logistics warehouses have become a vital resource, as they allow businesses to store products, manage inventory and facilitate rapid order fulfilment.
In 2024, the global e-commerce market was estimated to be worth $6.09trn, which was an 8.4% increase over the previous year. As a result of this demand, companies like Amazon and Alibaba are investing heavily in logistics infrastructure.
Strategic locations for warehouses near key consumer hubs have become essential. These distribution centres are being built closer to major urban areas, reducing shipping times and costs, while also benefitting from automation and advanced technologies like robotics to streamline operations.
Mobile communication towers: supporting the 5G revolution
Mobile communication towers play a pivotal role in supporting telecommunications networks, including 4G and 5G technologies. With mobile data usage also surging and wireless communication becoming a normal aspect of daily life, the demand for mobile communication towers has skyrocketed.
5G technology is one of the most significant drivers of growth in this sector. The roll-out of 5G networks requires a dense network of cell towers and small cells, as the technology depends on high-frequency signals that travel short distances but deliver faster speeds and have lower latency. Ask any gamer how important it is not to have ‘laggy’ internet!
Telecom companies are investing billions in expanding their networks, with much of that investment directed toward building and upgrading mobile towers.
Networks: expanding connectivity worldwide
The demand for robust, high-speed internet and communication networks is at an all-time high. Networks are the backbone of the digital world, enabling everything from everyday communication to sophisticated data transfer for businesses and Governments.
As more businesses have adapted to hybrid working, and the global economy becomes increasingly digital, high-speed networks have become a vital aspect of the transition to a digital world.
Telecommunication providers and other network operators have invested heavily in the expansion and modernisation of network infrastructure to meet the growing demand for reliable internet access, particularly in under-served or remote areas.
With the shift to a more digitally connected world, the network infrastructure sector offers significant potential for investors looking to capitalise on the next generation of communication technology.
Digital infrastructure: a resilient and future-proof investment
There is no doubt digital infrastructure is a cornerstone of the global economy. As demand for connectivity, data processing, and digital services intensifies, investing in these assets presents an opportunity to capitalise on the mega trends shaping the future.
Digital infrastructure assets are, by definition, physical in nature and beyond the means of most people. But the good news is they are also accessible to investors via the liquid listed securities of companies that own the physical infrastructure assets.
It’s possible to invest in the shares of these firms and benefit not only from the potential capital gains, but also the growing income that they provide.
Matt Norris is head of real estate securities at Gravis Advisory Ltd
Gravid Advisory Limited does not offer investment advice, and this article should not be considered a recommendation, invitation or inducement to invest. Prospective investors are recommended to seek professional advice before making a decision to invest. Your capital is at risk, and you may not get back the full amount invested. Past performance is not a reliable indicator of future results.
