UNCTAD: Land markets split as data centres hit $270bn and industrial investment weakens

Land markets are splitting as global capital concentrates on data centre development, while investment in conventional industrial and commercial real estate continues to weaken, according to new data from the United Nations Conference on Trade and Development (UNCTAD).

UNCTAD’s January 2026 Global Investment Trends Monitor shows that data centre investment exceeded $270 billion in 2025, accounting for more than one-fifth of global greenfield project value. Over the same period, international project finance for industrial and residential/commercial real estate fell by nearly 40% in value.

For real estate investors, the figures point to a structural shift in how development activity is being distributed across asset classes and locations.

The number of announced greenfield projects fell 16% globally to 16,589 in 2025, based on data from the first three quarters of the year, despite headline foreign direct investment rising 14% to $1.6 trillion. UNCTAD said much of the increase reflected financial flows and a limited number of large transactions and megaprojects.

Although project numbers declined, total announced greenfield capital expenditure still reached about $1.3 trillion, supported by a small number of large-scale investments in developed markets.

UNCTAD said this reflected growing concentration of development activity into fewer, infrastructure-intensive projects.

As a result, large parts of the industrial and logistics development pipeline remain subdued. In industrial and residential/commercial real estate, international project finance values fell significantly and project numbers declined by 9% in 2025.

By contrast, data centres have emerged as the dominant growth segment. UNCTAD said the sector added about $125 billion in new greenfield announcements and $30 billion in international project finance during the year.

France, the United States, and the Republic of Korea were the largest recipients of data centre investment. France attracted $69 billion, led by MGX’s $43 billion AI campus project, while the United States received $29 billion and Korea $21 billion. Brazil, Thailand, India, and Malaysia also ranked among the top ten host countries.

Semiconductor-related facilities followed a similar pattern. The value of announced projects in the sector increased by 35% in 2025, driven by policy-backed supply chain restructuring and demand linked to artificial intelligence applications.

In Europe, the European Union recorded a 56% increase in FDI in 2025, supported by higher cross-border merger and acquisition activity and selected greenfield megaprojects. However, the number of announced greenfield projects in the bloc fell 33%, highlighting the narrow base of development growth.

Germany recorded $50 billion in FDI inflows after exceptionally low levels in 2024, while inflows to France rose 45% to $39 billion and Italy increased 53% to $34 billion.

Infrastructure investment trends have also weighed on development activity. International project finance values fell 16% in 2025 and the number of deals declined 12%, marking the fourth consecutive annual contraction.

Greenfield investment in renewable energy fell 28% to $197 billion, while project finance in renewables declined by about 7%, reducing overall infrastructure-related development momentum.

At the same time, greenfield investment in global value chain–intensive sectors such as automotive, machinery, and textiles declined sharply. Project numbers in these industries fell 25% in 2025, while total investment value declined 5%.

UNCTAD said these trends reflected heightened policy uncertainty, geopolitical tensions, and investor caution over long-term financing commitments.

For institutional real estate investors, the data indicates that traditional development pipelines based on broad industrial expansion are becoming more limited.

Instead, development activity and capital deployment are increasingly concentrated in locations capable of supporting large-scale digital and technology-related infrastructure.

Looking ahead, UNCTAD said geopolitical risks and economic fragmentation are likely to continue weighing on project activity in 2026. While easing inflation and borrowing costs could support higher investment volumes, capital expenditure is expected to remain focused on strategic industries, particularly data centres and semiconductors.

As a result, land and development markets are likely to remain highly differentiated, with sustained activity in infrastructure-linked locations and weaker momentum in conventional industrial and commercial zones.

ANALYSIS: Data centres are not just a fast-growing property type. They are increasingly competing with traditional real estate for capital, land and financing capacity, and this crowding-out effect is likely to intensify through the late 2020s.

The scale of investment is central to this shift. JLL’s 2026 Global Data Center Outlook (published 6 January 2026) describes a $3 trillion investment “supercycle” to 2030, with global capacity projected to rise from around 103 gigawatts to 200 gigawatts. Roughly 100 gigawatts of new capacity is expected between 2026 and 2030, equating to about $1.2 trillion of associated real estate asset value creation.

When a single subsector absorbs capital on this scale, it inevitably competes with offices, logistics and mixed-use development for institutional risk budgets.

Fundraising data suggests that this competition is already reshaping allocation patterns. Colliers’ 2026 Global Investor Outlook reports that data centres accounted for about 31% of global private real estate capital raised in the first three quarters of 2025, up from an average of around 15% since 2020. This share now exceeds investment into many traditional segments, including offices and industrial assets.

Major fund closings, including multi-billion-dollar vehicles focused on digital infrastructure, underline the depth of institutional demand for infrastructure-linked property strategies.

For investors, the attraction lies in risk structure as much as growth. Many data centre investments offer long leases, investment-grade counterparties and substantial tenant capital commitments, reducing reletting risk and supporting more predictable cash flows. JLL also highlights that power availability is now the main constraint on development. This shifts underwriting away from cyclical rental growth assumptions towards the ability to secure deliverable energy capacity and grid access — features that many conventional schemes cannot provide.

This has important consequences for traditional sectors. Office markets continue to face uneven demand, refinancing pressure and elevated vacancy in secondary stock, limiting appetite for large-scale new deployment outside prime locations. Industrial and logistics remain supported by e-commerce and reshoring, but PwC and ULI’s Emerging Trends in Real Estate 2026 highlights a sharp fall in large-scale construction starts, while power constraints are becoming a binding barrier for automated logistics and advanced manufacturing facilities.

As data centres absorb a growing share of institutional capital, the pool of funding available for speculative or marginal development is narrowing. Investors increasingly compare returns on logistics parks, office campuses and mixed-use schemes directly with contracted digital infrastructure assets, rather than with public equities or bonds. In this environment, assets without secure infrastructure backing must offer higher yields or clearer repositioning potential to remain competitive.

Geographically, the reallocation towards infrastructure-anchored real estate is no longer confined to traditional data centre hubs. While core markets such as London, Frankfurt and Northern Virginia retain deep tenant demand and strong liquidity, power constraints, high electricity prices and slow permitting are increasingly limiting new development in these locations.

Savills highlights that these bottlenecks are diverting incremental investment towards markets that can deliver capacity more quickly. In Europe, Iberia and the Nordics are emerging as key beneficiaries. Savills’ EMEA Data Centre Spotlight 2025 identifies Spain, Portugal and Sweden among the fastest-growing markets by live capacity, supported by improving grid access, renewable-heavy energy systems and more predictable planning regimes.

By contrast, markets such as the UK face rising delivery risk as grid upgrades and regulatory processes extend development timelines. As a result, much of the next phase of institutional capital deployment is likely to favour regions where power availability and execution certainty outweigh pure location advantages.

CBRE’s research supports this shift, pointing to power constraints in established hubs as a key factor reshaping where new capacity can be delivered. In reports such as Global Data Center Trends 2025 and its European and US outlooks, CBRE says limited grid capacity and long connection timelines in markets such as London, Frankfurt, Amsterdam and Northern Virginia are slowing new development.

This is encouraging operators to look beyond traditional clusters towards locations where energy infrastructure can be secured more quickly, even if they are less established data centre markets.

Looking beyond 2026, this points to a more segmented real estate market. Infrastructure-integrated assets with secured energy, long-term contracts and digital connectivity are increasingly priced like utility-style investments. Conventional property, by contrast, must compete on income durability, asset management intensity and exit liquidity.

By the end of the decade, institutional real estate is likely to function as two distinct products: infrastructure-linked platforms benchmarked against regulated and contracted returns, and traditional property portfolios dependent primarily on location, tenant credit and operational performance.

The growing dominance of data centres suggests that capital rotation within real estate, rather than simple cyclical recovery, will be the defining feature of the next investment cycle.