Outside of South Africa, Lagos remains the largest data centre market in Africa recording increased white floor supply (space allocated for IT equipment) of over 9,000 sqm in 2021. Global institutional capital too, has been at a record high over the past year with key transactions recorded on the African Data centre market emanating from Lagos.
The acquisition of Main One Data Center by Equinix for US$320 million in Q4:2021 was perhaps the most notable transaction in the market. This acquisition is set to add approximately 6,000 gross sq m of space to Equinix, with over 50,000 sqm of land for future expansions. It followed on the acquisition of Medallion data centers by Digital Realty for US$29 million and the debut of the Africa Data Center 10MW facility in Lagos around the same period pointing to increased market activity.
Rapid internet penetration and tech sector growth to drive demand
With rapid internet connectivity, the number of internet users in Nigeria was estimated at 100 million in 2021, and the proliferation of tech-driven companies, the future of the data centers market in Lagos remains even more promising. This has further been exacerbated by the commitment by Google to set a substation in Lagos for its Equiano subsea cable as well as the undertaking by Facebook to set up a cable landing station in Nigeria offsetting the long-standing challenge of lack of infrastructure.
Global capital to drive market activity
As such, global investors including private, institutional and development capital remain keen on winning lucrative investment deals in the market with competition between the US, UK and emerging economies such as the Middle East and Asia set to open up the sector even more. This has been further evidenced by the announcement by Acronis, Singapore based cyber protection firm, in Q1 2022 on their cloud data center in Lagos that is set to enhance Nigeria’s goal towards data localisation.
However, the existing supply deficit of investible ready assets means we are likely to see increased development of colocation facilities in the market over the next few years. Arizton estimates that the market size of tier IV facilities alone will grow at a CAGR of 24% to reach US$ 15 million by 2026, while the overall market is set to grow at a CAGR of 17% by 2026.
Positioning for better returns
As market activity intensifies, access to reliable power supply, internet connectivity and security remain at the top of potential data center operators list in Lagos. With this in mind, Estate Intel has profiled location hotspots in Lagos through our data centers dynamic map that will aid potential investors in identifying areas of expansion and available land for potential developments. Click here to find out more and interact with the map.
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