The unseen forces of AI and cloud computing are never out of the news, yet behind the headlines lies a story of growth and innovation as tangible as bricks and mortar. The heavy computing power required by AI workloads, and the growing global demand for AI technologies, has seen a building boom take place around the world as developers scramble to build the facilities required to meet these needs.
According to market research, up to $7 trillion will be spent on data centers by 2030 – a huge sum driven largely by technology companies in the US and China, while Europe lags a few paces behind. The tech industry’s big three, Amazon, Microsoft and Google Cloud, accounted for almost two-thirds of global cloud revenue in Q2 2025. Combined with Chinese companies such as Alibaba and Tencent, their capital expenditure budgets for 2025 reach hundreds of billions of US dollars, much of it geared towards the industrial scale infrastructure and dependable energy sources that high-performance AI and cloud computing now demands.
The latest Allianz Commercial report, The Data Center Construction Boom,explores the extent of this global buildout and also questions whether the building bonanza can last. Despite the ongoing expansion, several factors could limit future growth, including the surging costs of construction. These have escalated dramatically from $200-$300 million, to projects exceeding $20 billion.
According to Allianz Commercial construction experts, average-sized facilities now cost between $500 million and $2 billion. Along with higher construction prices, the complex nature of data center construction and operation requires specialized insurance coverage for risks such as power supply concerns, faulty workmanship, fire or natural catastrophes.
“Construction projects as complex and extensive as data centers require significant time and resources. Typically, they require project-specific policies given their size and their unique risk profile that demands specialized insurance,” saysDarren Tasker,Head of Construction, Americas, at Allianz Commercial.
“The bigger data centers have a huge footprint. The scale of a $20bn+ facility can involve tens of thousands of workers on site at peak times, with significant equipment and building supplies moving in and out,” says Chris Fancher, US Head of Construction Property at Allianz Commercial. “Timings can be tight. This requires expert coordination, as any missteps or faulty workmanship can lead to potential losses or costly delays.”
Christian Sandric, Regional Managing Director of Allianz Commercial Asia, says, “As the demand for data centers in the region surges, it is crucial that parties fully understand the risks involved during construction and operation. Beyond the main risks such as power supply, rising construction costs and supply constraints, fire, and cooling requirements, parties also need to consider aspects such as cyberattacks, and impact on the surrounding environment, ecosystem, and infrastructure. For example, cooling systems may discharge heated water back into local water bodies, and this can raise temperatures and affect aquatic ecosystems.
“These complex and extensive risks call for specialist insurance and expert risk-management guidance, and clients need to work with an experienced team of underwriters who knows the business and can support the project from beginning to end, including multi-year coverage and policy extensions as needed.”
