Market Trends of Russia Data Center Construction Industry
Tier 3 Contributing Significant Market Share while Tier 4 Showcase Growth
- In 2023, tier 3 was positioned to secure a significant market share, propelled by a notable uptick in tier 3 certifications across various facilities. Russia, boasting over 15 tier 3 data centers, is also witnessing the construction of several more. Concurrently, tier 4 is primed for accelerated growth in the near future.
- Moscow is home to the largest concentration of tier-3 data centers in Russia. Notable players in this space include Rostelecom, 3Data, MTS PJSC (MTS Group), Selectel Ltd, DataPro, RackStore, IXELERATE LLC, Yandex Cloud LLC, and Rosenergoatom, among others.
- SMEs increasingly opt for tier 3-rated data systems, attracted by their robust redundancy features. This shift predominantly stems from the heightened emphasis on data security. Furthermore, the uptick in smartphone adoption, focus on premium digital content, a surge in visually immersive online gaming, and a notable transition of consumers toward online shopping and digital transactions collectively fuel the expansion of tier 3 data centers across the country.
- There is a gradual decline in demand for tier 1 and 2 facilities, a trend likely to persist due to frequent and prolonged outages. Consequently, users are increasingly favoring tier 3 and 4 facilities, driven by the rising need for robust data storage, processing, and analysis capabilities.
- With an increasing number of businesses offering cloud-based services, the demand for tier 4 data centers is set to surge in the upcoming years. Consequently, numerous data center providers are ramping up construction efforts to offer cutting-edge colocation spaces.
Understand The Key Trends Shaping This Market
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IT and Telecom to Have Significant Market Share
- Within the Russian economy, the IT sector stands out as a strategic segment, outpacing the overall GDP growth rate, a trend projected to persist in the coming years.
- Russia's market is witnessing a surge in cloud adoption, propelled by advancements in technologies such as artificial intelligence, Big Data, and blockchain. Moreover, as Russia pivots toward a digital ruble and actively participates in cryptocurrency mining and trading, the demand for robust data center infrastructure is poised to escalate.
- Technoparks in Russia, such as Skolkovo, IstraDigital, and Mordovia Republic’s Technopark, are pivotal in driving growth and innovation in the country's data center sector, providing a host of advantages to potential investors.
- The surging 4G adoption, escalating broadband speeds, and the imminent 5G revolution are compelling telecom vendors to bolster their investments in the data center sphere. In December 2023, Russia announced plans to roll out 5G networks in its major cities by 2026. Moreover, the government pledged approximately USD 38.61 million to aid operators in transitioning to these advanced 5G networks.
- In January 2023, Russian telecom operators signed forward contracts with local manufacturers of communication network base stations totaling over RUB 100 billion (USD 1.1 billion). The contracts entail the delivery of approximately 75,000 base stations by 2030, with a mandate for operators to procure solely from domestic sources starting in 2028. This move underscores the growing demand for data processing, prompting the imperative for new data centers and expansions.
