High investor demand for LatAm edge data centers increases land values

Latin American land prices have risen rapidly due to investor demand for edge computing and data center decentralization.  CBRE reports investors are looking for new metropolitan locations until the pricing cycle changes. Due to rising land prices, Brasília, Fortaleza, and Porto Alegre are seeing more development. The US real estate investment firm reported that Peru, another growing data center market, attracts new investors seeking lower land costs.

The evaluation is part of CBRE's 2023 Investor Sentiment Survey, published at the end of June. Land prospecting and data center project advisors include the firm. Data center locations are not just based on land availability and cost. Market demand, electricity supply, networking infrastructure, and proximity to competitor data centers also influence such decisions.

However, given the increase in the value of land and structures in the main urban - and data-consuming - centers of the region, the land price factor has grown in significance. CBRE expects that Latin American data center electricity capacity climbed 4% to 672MW in 2022.

The report notes a rise in LatAm deals comprising global infrastructure and private equity investors in recent quarters, as well as upcoming projects. CBRE said LatAm faces the same issues as other regions, including insufficient power availability, “most notably in Mexico and Chile,” and global supply chain interruptions that hinder data center building. 89% of survey respondents worldwide plan to boost data center investments in 2023. 60% of surveyed enterprises are American. This year, the most popular type of data center is hyperscale. Hyperscale turnkey investment prospects attracted 54% of respondents, up from 35% in 2022.