Dubai Holding eyes European data centre foothold

Dubai Holding is weighing an investment in Hscale, the Bain Capital-backed data centre builder, as the Dubai investment group looks to expand its European portfolio at a time when artificial intelligence and cloud computing are reshaping demand for digital infrastructure.

The group is working with a financial adviser on a possible transaction, while Bain Capital seeks additional capital to accelerate Hscale’s build-out across Europe, the Middle East and Africa. Deliberations remain at an early stage and there is no certainty that a deal will be completed. The size of the possible investment has not been disclosed.

Hscale was unveiled in May 2025 as Bain Capital’s hyperscale data centre platform for the EMEA region. The company emerged from Bain’s purchase of an 80 per cent stake in AQ Compute, the data centre business of Germany-based Aquila Group, in October 2024. Aquila retained a minority holding, giving the venture both private-equity backing and access to a renewable-energy-oriented development pipeline.

The platform is being positioned to serve hyperscalers, cloud providers and AI-driven customers requiring large campuses, high power density and long-term energy access. Its existing and planned assets include a live 6MW facility near Oslo, expansion capacity in Norway, a project outside Barcelona and larger campus plans in markets such as Madrid and Milan. Hscale has also been targeting more than 1GW of capacity over time, placing it among the ambitious new entrants trying to close Europe’s supply gap.

For Dubai Holding, a move into Hscale would mark a shift beyond its established strengths in property, hospitality, asset management, entertainment and financial investments. The group has more than AED500bn in assets across over 30 countries and 10 sectors, and has been steadily adding overseas exposure through hospitality and investment vehicles. A data centre stake would give it access to an infrastructure class increasingly viewed as core to AI adoption, cloud migration and digital sovereignty.

The potential transaction also reflects a wider pattern of Gulf capital moving into hard digital infrastructure. Regional investors have been expanding exposure to AI platforms, semiconductors, cloud services and data centres, backed by long-duration capital and national strategies aimed at building advanced technology ecosystems. Data centres have become attractive because they combine real assets, contracted revenues and exposure to fast-growing compute demand.

Europe is a natural target, but it is also a difficult one. Demand from hyperscale cloud providers has outpaced available capacity in established hubs such as Frankfurt, London, Amsterdam, Paris and Dublin. Vacancy rates across major markets have fallen sharply, while power availability, grid connections, permitting delays and land constraints have slowed new supply. Secondary markets including Milan, Madrid and Barcelona have gained importance as operators seek locations where energy access and planning approvals may be more workable.

The commercial case for Hscale rests partly on that imbalance. AI workloads require high-density facilities, advanced cooling and dependable electricity supply. Traditional enterprise data centres are often unsuitable for large training and inference requirements, while hyperscalers increasingly want campuses that can scale over years rather than single-site deployments. Operators that can secure land, power and customers early are likely to command strong investor interest.

Bain Capital has already been active in digital infrastructure through platforms in Asia and the United States, giving Hscale a template for rapid expansion. Its partnership with Aquila adds a sustainability angle, with clean-energy access expected to be a key differentiator in European markets where grid stress, carbon reporting and community resistance are rising. Data centre developers increasingly need to show not only capacity but also a credible answer to power consumption and environmental scrutiny.

The proposed Dubai Holding investment would come as private capital competes heavily for exposure to AI infrastructure. Global demand for data centre capacity is projected to rise sharply through 2030, driven by cloud expansion, generative AI, enterprise digitisation and sovereign compute ambitions. Investors are also looking beyond buildings to electricity generation, battery storage and grid-adjacent assets, as power supply has become one of the defining constraints on the sector.

Still, the opportunity carries risks. Data centre valuations have climbed as capital has chased scarce capacity. Construction costs remain high, equipment lead times can be long, and local opposition to new campuses has intensified in parts of Europe over water use, energy consumption and noise. A platform such as Hscale must also compete with established operators and hyperscaler self-build programmes, while navigating different regulatory regimes across markets.

For Dubai Holding, the attraction lies in gaining exposure to a sector tied to the next phase of global infrastructure spending without building the platform from scratch. For Bain Capital, bringing in a strategic investor with deep capital could support a faster roll-out at a time when scale, speed and energy access are becoming decisive. The talks underline how data centres have moved from a specialist property niche to a central battleground for investors seeking a stake in the AI economy.