Why East not West is best when it comes to digital infrastructure investment

Definitions of ‘Frontier’ include ‘the edge of a settled area of a country’ (think ‘wild west’), the border where one country meets another, and conjuring up a spirit of adventure.

For data centre investors, acquisition specialists and colocation companies the CEE (Central and Eastern Europe) development ecosystem represents a new frontier. 

Will 2026 be seen as the year digital infrastructure investors looked east beyond Poland to territories such as Romania, Austria, Bulgaria and Hungary for the next growth opportunity alongside relatively small economies in the Balkan and Baltics regions? 

There are many indicators that it will. 

Today’s Tier 1 and 2 markets face mismatches between the demand opportunity and power availability. 

Such local mismatches are being compounded by the long term nature of national grid reinforcement projects which is impacting zoning, permitting and planning. This presents restricted growth and development opportunities in FLAP-D markets already close to full capacity.

With power having overtaken land as being the biggest constraint in traditional markets this is providing a catalyst to look east – or risk missing out.

No Vacancies

The speed at which secondary markets responded to plummeting Tier 1 vacancy levels is adding to the pressures on investors to seek new locations. 

According to the CBRE Real Estate Report vacancy rates in primary and secondary European data centre markets will hit an all-time low of 6.5% by the close of 2026. 

Having rapidly responded to overspill needs Tier 2 markets are already experiencing huge competition for both power and land. As hyperscale and GPUaaS providers seek double-digit megawatts, capacity at scale will become harder to source across Europe. 

Yet despite capacity constraints, the continued decrease in vacancy is in a period of record-breaking new supply with 750MW to be added across Europe.

“The site selection process for tenants is becoming more complex as viable alternatives are often spread across multiple submarkets, or even countries,” says CBRE. 

George Dritsanos, CEE Vice President Secure Power & Data Centers at Schneder Electric, says “Power availability has become the decisive factor for data center investment across CEE markets. When we evaluate opportunities in Bulgaria, Romania, Hungary, or the Balkans, the first question is always about power – can the grid deliver the required capacity, what's the connection timeline, and what are the long-term cost and reliability prospects?”

“The pattern we see is clear: projects move forward where power has been secured first. Markets that can demonstrate clear grid planning, reasonable connection timelines, and stable regulatory frameworks will attract the investment. Those that can't will struggle, regardless of other advantages.”

The Growth trajectory of CEE 

Michael Winterson – EUDCA president says that while there will continue to be mid to large sized projects announced in Tier1 and 2, Frankfurt, Amsterdam are Dublin are basically full resulting in ‘FLAPD putting in constraints pushing large investments out.’

Mr Winterson notes there was a response to this in Southern and Northern Europe where governments and investors moved quickly to attract investment. 

“CEE countries should be looking at rapidly growing smaller markets and asking how to build their own domestic interconnection hubs that will drive local digital economies connected to the rest of the world. Look at the hyper scale solutions in Spain and at Start Campus in Sines in Portugal and ask how and why that happened?” he says.

As well as looking northwards and south what can Governments and Data Centre Associations across CEE learn from booming Middle East and Asia markets?

An HSBC report titled "Enabling Growth in Compute Infrastructure Through Investment Strategy and Capital Structure Advisory that focuses on Middle East and Asia markets was issued in January 2026. 

It says: "Capital strategy of data centres cannot be divorced from geography. The where often determines the how. There are distinct differences between mature and developing markets....The opportunity set for data centres in developing markets is government led, and in some cases government sponsored. Government support is attractive especially in helping to navigate the regulatory landscape and in terms of source land, power, materials, and workers. The financing of digital infrastructure has evolved from a niche real estate play into a complex global asset class underpinning the future of technology. The successful financing of and investment in data centres now depends on having a capital strategy that is aligned with technological and geographic risk specific to each data centre. Investors must navigate the variability of tenant creditworthiness in the AI space, the depreciation curves of GPU assets, and the sovereign risks of developing markets."  

Read the full report here: www.business.hsbc.ae

Where are we now? 

In February 2026 the EUDCA issued its State of European Data Centres Report.

In frontier market terms it says Central and Eastern Europe continues to attract selective hyperscale investment, with Poland standing out as the region’s primary growth node.

Neocloud providers amplify this geographic diversification by targeting locations where high-density compute can be deployed at speed, often reinforcing the growth trajectories of emerging markets.

Average PUE numbers in CEE are 1.54 — reflecting a mixed building stock with fewer next generation facilities

League Table EUDCA report Feb 2026 _ Baltics and CEE

Looking longer term the EUDCA report says to expect that ‘by 2031, colocation IT power in Europe is projected to exceed 23.8 GW, with scale sites growing at a 27% CAGR, and increasing regional diversification.’

It says: “Investment has moved from capacity expansion to capital-intensive, AI-optimised infrastructure at industrial scale, with significantly higher spend per site.”

How much of that total will be in the frontier markets?

Can CEE take advantage?

For those promoting individual countries for data centre infrastructure investment there is naturally some overlap in terms of how local development opportunities are presented. These are AI driven demand, land availability, growing sector recognition among policy makers, energy transformation and improving connectivity. 

What will developers find?

In reality investors evaluating different CEE national frontier markets are discovering a mixed bag of readiness, aspiration, and growth potential.

Schneider’s Dritsanos sees markets developing at different paces. He points to Romania's National Recovery and Resilience Plan dedicated EUR 500 million specifically for sovereign cloud infrastructure as showing government commitment, ‘but execution on grid access remains critical.’

Bulgaria and Hungary are earlier in their development cycles but showing promise. Bulgaria's strategic location and competitive energy costs make it attractive, but the regulatory framework around large power consumers is still maturing. Hungary, particularly Budapest, benefits from its position as a regional transit hub with good cross-border connectivity, though grid capacity for hyperscale deployment is still developing. In the Balkans more broadly, we see countries positioning themselves as alternatives to more saturated Western European markets, he says. 

Some nations across CEE suffer from the same issues experienced in established markets such as constrained grids, long connection times, complex planning regimes but this is balanced by more options on suitable sites, new commitment to and recognition of data centres by governments, construction and engineering talent, lower costs and improving connectivity. 

CEE Data Centre Associations

Poland - https://pldca.pl/en/
Austria - https://austriandatacenter.org/
Romania - https://datacenter-forum.ro/en/home/
Czechia and Slovak - https://www.csdia.online/
https://www.linkedin.com/company/czech-slovak-digital-infrastructure-association/
Slovenia: https://www.gzs.si/en_zit
Hungary – formation scheduled for 2026
Croatia - https://www.linkedin.com/company/hrdca/?originalSubdomain=hr

The next article in this series is a deeper dive into the in-country and growth opportunities including Poland, Romania, Hungary, and a range of other CEE territories