Spain's Merlin Properties bets on AI boom to drive revenue growth

MERLIN Properties SOCIMI

30/09/2024 11:36

By Matteo Allievi and Javi West Larrañaga
       Sept 30 (Reuters) - Spanish real estate group Merlin
Properties  MRL.MC  expects its fledgling data centre business
to account for about 40% of its revenue by 2030 as it taps into
a boom in artificial intelligence, CEO Ismael Clemente told
Reuters.
    Data centres made up less than 1% of Merlin's revenue in the
first half of this year, which mainly came from offices,
shopping malls and logistics.
    But Clemente estimated that its data centre division would
bring in around 313 million euros ($350 million) in gross rents,
or about 40% of the total, by the end of the decade.
    Merlin, which already has three data centres in Spain and is
building one in Portugal, launched a 1-billion-euro capital
increase in July to finance its data processing business and
expects to raise an extra billion in debt in the first half of
2026.
    Appetite for artificial intelligence globally has propelled 
investment in data centres, which are mainly used for data
storage and cloud computing services.
    Europe still has only about a third of the data centres'
installed capacity of the United States, Clemente said, although
European countries are rushing to build more centres.
    Clemente said Spain was a "happy island" for data centre
development due to cheap energy, abundant land and suitable
locations.
    "Spain has an absolutely privileged location since 70% of
the world's data traffic passes through there thanks to its
connection with all relevant submarine cables," he said in a
phone interview with Reuters late last week.
    Companies such as Amazon  AMZN.O , Acciona  ANA.MC , ACS
 ACS.MC , Iberdrola  IBE.MC  and Solaria  SLRS.MC  have been
investing in data centres in Spain. 
    Clemente pointed out, however, that building data centres
requires hefty investments and specialised knowledge, while red
tape can slow down projects.    
    Barclays analyst Celine Soo-Huynh also pointed to potential
licensing delays and the need to import a lot of equipment from
the United States "because the European market is not
necessarily prepared", as factors that could hamper Merlin's
ambition.

($1 = 0.8951 euros)

 (Reporting by Matteo Allievi and Javi West Larrañaga, editing
by Andrei Khalip and Susan Fenton)
 ((matteo.allievi@thomsonreuters.com;))