The AI Land Grab

Why the Race for Data Centre Space Is Reshaping British Industrial Property

In May 2025, Saudi Arabia’s Public Investment Fund launched Humain – a national AI champion with plans to build up to 6 gigawatts of data centre capacity by 2034. The following month, Abu Dhabi’s Lunate partnered with Blackstone to commit $5 billion to logistics and digital infrastructure across the Gulf. Across the GCC, the message from sovereign capital is unambiguous: the infrastructure of artificial intelligence is among the highest-conviction investment themes of this decade.

What is less well understood – even among sophisticated Gulf investors – is that some of the most attractive physical infrastructure underpinning the global AI economy is located not in the deserts of Saudi Arabia or the free zones of the UAE, but in the industrial corridors of the United Kingdom.

Britain has emerged as one of Europe’s premier data centre markets. The UK Government’s decision to designate data centres as Critical National Infrastructure, and the creation of AI Growth Zones to fast-track planning approvals for digital infrastructure, has transformed the investment calculus for this asset class. According to JLL, the rest of the UK outside London is expected to grow from hundreds of megawatts of data centre capacity to 2.25 gigawatts – twice the current London total. CBRE has described 2026 as likely to be the second strongest year for data centre supply creation on record.

From Warehouses to Watts

Data centres are, at their core, large industrial buildings. They require significant floor area, exceptionally high power supply, robust cooling infrastructure and strategic connectivity. Between 2019 and 2024, data centre operators accounted for 7% of all industrial floorspace leased in the UK – a share that analysts uniformly expect to grow materially as AI adoption accelerates.

The critical resource is power. A modern hyperscale data centre may require tens or hundreds of megawatts – a constraint rapidly becoming the primary determinant of site selection across the UK. The government’s new ‘first-ready, first-connected’ grid connection system is beginning to unlock grid access for well-prepared sites. But power-ready industrial land – sites with secured grid connections, adequate substation capacity and the infrastructure to support energy-intensive occupiers – is exceptionally scarce, and commands a significant premium over conventional industrial sites.

“The physical real estate of the AI economy is being built now, in the UK, and the window to acquire it at reasonable valuations will not remain open indefinitely.”

The Defence Dividend

Data centres are not the only non-traditional driver reshaping industrial demand. Defence is the other. The UK Government has committed to increasing defence expenditure to 2.5% of GDP by 2027 – a target that carries direct and significant real estate implications. Savills estimates this will require up to an additional 285,000 square metres of industrial and logistics space, on top of the 2.4 million square metres already occupied by UK defence companies. This is government-contracted demand, underpinned by long-term sovereign commitments.

The geopolitical context amplifies this. Renewed tensions across multiple theatres are accelerating a broader rearmament cycle across NATO member states. The UK, as one of Europe’s largest and most capable defence economies, is at the centre of this trend. Industrial real estate that can accommodate the manufacturing, storage, maintenance and distribution needs of the defence sector is a specific and scarce category likely to see sustained, government-backed demand for years.

Onshoring and Supply Chain Resilience

The third structural driver is the global shift toward supply chain resilience and onshoring. A decade of geopolitical stability encouraged companies to optimise supply chains for efficiency – stretching them across continents in pursuit of lowest cost. That era is ending. US tariffs, Middle East trade disruptions, post-pandemic logistics failures and the energy crisis have combined to make supply chain vulnerability a boardroom-level concern. The UK, as a stable, well-governed country with sophisticated logistics infrastructure and established manufacturing capabilities – particularly in aerospace, automotive, pharmaceuticals and defence – is a natural beneficiary.

Freeport and Investment Zone designations are adding a further layer of attraction. Sites across the Thames Gateway, the Celtic Freeport in Wales, the East Midlands Freeport and others offer customs and tax benefits actively attracting foreign direct investment and pre-let activity from industrial occupiers seeking competitive cost structures.

Where the Opportunity Sits

The immediate opportunity lies in logistics and industrial assets that serve the new occupier base: modern, energy-efficient buildings in strategic locations, with sufficient power capacity to accommodate technology-intensive uses. The East Midlands Golden Triangle, the Thames Gateway, and Scotland’s Central Belt are among the most compelling sub-markets – combining established demand with more accessible entry pricing than core London locations.

The medium-term opportunity lies in land. Power-ready industrial land adjacent to key infrastructure nodes, with secured grid connections and planning-friendly designations under the AI Growth Zone framework, is the most constrained and least efficiently priced asset in the UK industrial market today. Identifying, securing and developing such sites requires local knowledge and planning expertise – precisely the kind of capability that a well-connected UK real estate partner can provide.

Our Views

The UK data centre and advanced industrial market is genuinely exciting, and the structural demand drivers are real. But this is a sector that has attracted significant hype – and hype tends to compress pricing and reduce the discipline of underwriting.

Data centre development is technically complex. The power constraint is real and will not be resolved quickly; sites that appear well-located but cannot secure adequate grid capacity are not investable regardless of their other attributes. That said, the convergence of AI-driven demand, government-backed occupiers, onshoring trends and a severely constrained supply pipeline creates conditions that sophisticated investors rarely encounter in a market as liquid, transparent and legally robust as the United Kingdom. Gulf sovereign wealth funds – with their long-duration capital, deep familiarity with digital infrastructure investment, and growing strategic interest in AI – are unusually well-positioned to access this opportunity. The window to act is open. It will not stay that way.