The world’s digital transformation is fuelling a US$7 trillion data centre construction boom as artificial intelligence (AI) and cloud computing drive unprecedented demand for high-performance infrastructure.
However, a new Allianz Commercial report indicated that rising costs, power constraints and environmental risks could soon test the industry’s limits.
Titled “The Data Centre Construction Boom”, the report reveals that global tech giants are spending hundreds of billions of dollars annually to expand computing capacity, with the US and China leading the surge.
Allianz Commercial Head of Construction (Americas) Darren Tasker shared that the US alone projected to supply two-thirds of global data centre power demand by 2028, while Greater Beijing now accounts for 10% of worldwide hyperscale capacity.
“Data centres are the factories of the digital economy. But these massive, complex projects — often exceeding US$20 billion in value — demand specialised risk management and insurance coverage,” he said.
Construction costs have surged sharply, with typical projects now ranging from US$500 million to US$2 billion, compared to just a few hundred million a decade ago. Tight construction timelines and the logistical demands of massive equipment movements add further exposure to delays, cost overruns and workmanship-related losses.
Allianz warned that power supply is becoming a critical bottleneck as global data centre electricity consumption is expected to double to 945 terawatt hours by 2030, roughly equivalent to the entire energy use of Japan. To counter grid strain, developers are turning to on-site renewables, gas generation and even small modular reactors to secure reliable power sources.
Environmental risks are also escalating. The growing use of lithium-ion batteries raises fire concerns, while data centres’ reliance on water-intensive cooling systems, consuming up to 19 million litres a day per site, is straining local ecosystems.
In Asia, data centre capacity is expanding at record pace. The Asia Pacific region, which accounts for 30% of global capacity, is forecast to grow 21% annually through 2028, led by China, Japan and India, with Malaysia and Indonesia emerging as key growth markets.
“As Asia’s data centre boom accelerates, developers must address a new spectrum of risks from cyberattacks and energy security to environmental impact,” said Christian Sandric, Regional Managing Director of Allianz Commercial Asia. “These projects require not just capital, but deep expertise and long-term resilience planning.”
While the data centre buildout is powering the next phase of the global AI and cloud revolution, Allianz cautioned that sustaining the boom will depend on smarter risk management, sustainable design and secure energy infrastructure — the new cornerstones of the world’s digital economy.
