New Zealand Data Center Construction Market Size

New Zealand Data Center Construction Market Analysis

The New Zealand data center construction market is projected to register a CAGR of 17.43% during the forecast period. The New Zealand government is taking initiatives to increase the infusion of technology into various services. Numerous FinTech startups in the country also increase the demand for data centers.

• The government of New Zealand announced the building of a data center worth USD 188 million in its Auckland air force base in April 2023 and is expected to complete construction by 2025. Such initiatives are expected to provide more opportunities for the vendors studied in the market.
• With the growing familiarity and knowledge of cloud environments, along with opportunities to operate mixed environments, organizations can make decisions about workload locations, which drives their dependence on data centers. Around 74% of New Zealand organizations believe they maintain a very high level of maturity in managing cloud and infrastructure environments. This was a 10-point rise over 2020, indicating organizations have greater experience managing modern, cloud-based infrastructure. There is also a growing understanding of where and why certain applications should be housed and managed.
• Furthermore, New Zealand aims to introduce open banking by 2025, making the sector the first to give consumers full control of their financial data. Proponents of "open banking" say it may allow consumers to share their banking data with other providers to get better and cheaper services than they already have. Australian banks, which dominate New Zealand's banking sector, are increasing their reliance on data to approve loans and better sharing of data to support this. The ability to automate large parts of loan processing is considered a way to cut costs by banks, which are a headwind due to rising interest rates and staff wages.
• Environmental, cost, and workforce-related challenges could restrain the New Zealand data center construction market. The environmental impacts are wide-reaching, impacting climate change, pollution, biodiversity, and natural resources. Though the challenges are broad, they present many opportunities for improvement and long-lasting positive impact. The cost of constructing the data center is also high, which could restrain small and medium enterprises from setting up a new center. The vendor's focus is on the regions that have lower costs for construction.
• Furthermore, the COVID-19 pandemic struck when demand for data center capacity expanded rapidly, and it applied restrictions to constructing new facilities. There was a specific impact on the market, such as data network traffic increased the traffic by increasing usage of applications such as Zoom and Microsoft Office, among others. Moreover, the pandemic caused challenges in constructing a data center due to disruption in the supply chain, which slowed down the market's growth. However, post-pandemic, the demand for data capacity has more than tripled, and companies are shifting toward a hybrid cloud environment. Hence, the market has seen a resurgence in data center construction.