Beijing, China, stands out as the world’s best location to set up a data centre, followed by outlier Addis Ababa, the capital city of Ethiopia, and London, UK, according to the latest fDi Benchmark study looking for the world’s most attractive locations for data centre operations.
The study, based on fDi Intelligence proprietary data and models, benchmarks the 100 cities that have received the highest number of FDI projects between January 2003 and June 2022 to find those with the best cost/quality profile for setting up a modelled data centre employing 30 persons and rising over a 465 square metre plot of industrial land. The model allocated a 75% weight to quality factors and the remaining 25% to cost factors.
While Asian cities retain an edge, the top 10 reveals that the skills and infrastructure required to set up and run successful data centres operations are available in major global cities all over the world.
Shanghai, China, and Tokyo, Japan, come in at 4th and 5th, respectively, followed by São Paulo, Brazil (6th); Shenzhen, China (7th); Istanbul, Turkey (8th); Chongqing, China (9th); and Seoul, South Korea (10th), the fDi Benchmark study reveals.
Beijing tops the overall ranking as it offers the best quality for data centre operations – a measure of labour availability and quality, industry cluster, infrastructure and accessibility, general business environment and living environment – at a price point that remains competitive. It costs just over $2m per year to run a 30-person, 465 square metre data centre in Beijing, with labour costs making up 70%, utility costs another 28% and property costs accounting for the remainder.
However, with data storage becoming a highly sensitive and political issue, and another front of the trade war between China and the US (the study did not factor in the risks of data nationalism), global data centres companies have been cautious about setting up operations in China’s capital in the past few years, with the last such FDI project in the city tracked by fDi Markets in 2017.
Unlike Beijing, second-placed Addis Ababa has been able to capitalise on its advantageous cost/quality profile to attract FDI in data centres as the government of Abiy Ahmed liberalises the telecommunications sector (though not without hiccups). Last January, Vodafone-owned Safaricom, which won a newly issued mobile telecommunication licence in 2021, announced plans to invest $100m to establish its first data centre in Addis Ababa to cater to its growing operations in the country. Djibouti-based data centre company Wingu Africa, Raxio of the US, and Cambodian IT firm RedFox have also announced they will set up and run data centres in the city following the liberalisation of telecom licences.
Despite an above-average cost profile, the quality offered by data centre operations in London was enough to propel the UK’s capital city in third place in the fDi Benchmark study. London is second only to Singapore for number of FDI projects in data centres between 2003 and June 2022. Combined with adjacent Slough –ranked 33 out of 100 in the study – London’s metropolitan area constitutes the world’s biggest data centres cluster from an FDI perspective.
Previous fDi Benchmark studies:
- Best locations for chemical labs
- Best locations for AI labs
- Best locations for regional HQs
- Best locations for electronics R&D
- Best locations for film and TV productions
- Best locations for life sciences R&D
This article first appeared in the October/November 2022 print edition of fDi Intelligence. View a digital edition of the magazine here.