The expansion of the data centre market in Brazil

Current trends and future perspectives

The data centre market has been experiencing rapid global growth, driving the demand for new constructions and ventures with significantly larger storage capacities. This surge is largely attributed to the exponential rise of Artificial Intelligence (AI) and the resulting need for advanced virtual storage solutions.

According to the annual "Global Data Center Trend Report 2024" by CBRE (Global Commercial Real Estate Services), the data centre stock in Latin America increased by approximately 15% in the first quarter compared to the previous year, reaching 650 MW. São Paulo, Brazil's largest market, accounts for nearly two-thirds of this total, absorbing 40.4 MW alone this year¹.

The strong investment in São Paulo is primarily due to its established logistics market, the presence of major companies, technology hubs, and universities that provide a qualified workforce in the technology sector and create new business opportunities in the data centre segment. The increase in investment in clean energy in the region, especially in hydroelectric, solar and wind energy, also plays a fundamental role in the growth of data centers, as it guarantees a stable and constant supply of energy².

On the other hand, due to competition for suitable land for data centres and high real estate costs in São Paulo, secondary markets have been gaining ground in Brazil. Rio de Janeiro, in particular, has been consistently growing, contributing significantly to the sector's development and has already established itself as Brazil's second-largest market.

Despite this positive development scene, it is important to note that the construction and operation of a data centre is also essentially delicate, both from a contractual and practical point of view. 

Experience in the Brazilian market indicates that data centre contracts predominantly occur through the construction management at-risk (CM-at-risk) model, due to the high risks involved. In this model, which has been used in Brazil in recent years for some infrastructure projects, the contractor assumes responsibility for completing the project within a specified timeframe, meeting quality requirements, and adhering to a guaranteed maximum price (GMP) to be borne by the project owner.

From a practical perspective, it must be said that the operation of a data centre is inherently delicate, as it cannot tolerate any instability or interruption, whether in connectivity or power supply. As a consequence, the sites for these centres must be located in regions with robust power availability, continuous connectivity via fiber optic networks and minimal environmental risks, such as earthquakes.

In this context, considering Brazil's experience in risk contracts, coupled with its practical experience, it is possible to state that Brazil is exceptionally well positioned to thrive in the global data centre sector. Brazil's established practices in data centre contracting, together with its substantial land availability and abundant energy resources, provide a solid foundation for growth, as is already occurring.

These factors, combined with Brazil's significant advancements in technology infrastructure and its strategic geographic position, make it an attractive destination for international investment. 

For more information, please contact Leonardo Toledo da Silva and Mateus Pires Zottarelli.

Leonardo and Mateus are, respectively, partner and associate lawyer at Toledo Marchetti Advogados, based in Brazil.

¹Accessed on here.
²InvestSP, an investment promotion agency linked to the São Paulo State Secretariat for Economic Development, has mapped out 23 ongoing private projects focused on energy transition, which are expected to receive nearly R$ 25.7 billion in investments over the coming years.