Data centres in Île-de-France: land issues and property valuation

The data centre geography of the Paris region is not uniform and has changed considerably. Seine-Saint-Denis, the historic location, retains a central role for edge sites and for maximum connectivity requirements around the Plaine Commune interconnection nodes. Essonne has become a major growth hub in terms of volume, benefiting from available land and proximity to the RTE grid. Seine-et-Marne, now identified by RTE and the Direction générale des entreprises (Directorate-General for Enterprise) as one of the national fast-track sites (Fouju, Montereau), is gaining ground for AI-related hyperscale requirements. Val-d’Oise and Yvelines, through their grid-connected former industrial sites, are actively seeking to attract these projects, which has the advantage of meeting the net zero land take objective while making use of land undergoing conversion.

This concentration has direct effects on local land markets. Operator demand competes head-on with logistics projects and industrial conversion schemes, creating marked pressure on land values. The body of transactional evidence nevertheless remains opaque: most transactions are conducted by private treaty and are rarely published, which presents the valuer with a difficulty that simply consulting public databases cannot resolve.

Expansion in the Paris region is coming up against a rapidly expanding body of regulation, which bears directly on the feasibility of projects and therefore on their value.

Grid connection has become the main limiting factor. In France, more than 140 industrial and data centre projects representing a combined capacity of around 21 GW were in the RTE queue at the beginning of 2025, which translates into connection lead times now ranging from 36 months to several years depending on the capacity requested. RTE is currently considering an overhaul of its capacity allocation policy, which is at present based on a first come, first served rule. For the valuer, these lead times are not a background variable but a valuation variable: they delay commissioning, alter the income profile adopted in the DCF and give the connection headroom available on a site a growing option value, distinct from the buildings.

On the environmental side, the main technical installations of a data centre fall under ICPE (installations classified for environmental protection) headings 2910 and 2925, subject to declaration, registration or authorisation regimes depending on combined capacity. In addition, since 2024 the European Energy Efficiency Directive 2023/1791 (EED) has required annual public reporting of PUE, WUE, ERF and REF indicators for all sites above 500 kW, and foreshadows a European data centre rating scheme that will in time become a value benchmark. Water consumption by cooling systems is attracting growing attention in a context of recurrent water stress in the Paris basin.

The planning framework introduces a further constraint. The net zero land take (ZAN) objective set out in the Climate and Resilience Act requires local authorities to make choices between uses. Data centres, which are net consumers of sealed land for a limited number of jobs, are not always welcomed in local planning documents. Several municipalities have introduced restrictions in their local zoning plan (PLU); other areas, by contrast, are promoting their grid-connected brownfield sites, which makes it possible to combine compliance with the ZAN objective and significant tax revenue from the business property tax (cotisation foncière des entreprises) and the business value added contribution (cotisation sur la valeur ajoutée des entreprises).

A data centre is not an office building whose tenant happens to be a digital operator. It is a hybrid asset, let not by the square metre but by contracted power, expressed in kilowatts or megawatts, and the contractual relationship between owner and user may take the form of a conventional commercial lease or a service agreement.

This hybrid nature has several consequences for valuation. The precise nature of the asset (Powered Land, development project, Powered Shell or Fully Fitted) and the operating model adopted (owner-operated, colocation, hyperscale) determine the income profile, the length of commitments and the level of risk. The boundary between the real estate asset and the technical equipment, which may account for 50% to over 70% of the total investment cost depending on the type of site and the level of redundancy, must be dealt with explicitly rather than left implicit. The operational performance of the site, measured in particular by its PUE, now published in the European register, becomes a valuation variable in its own right, because it directly determines future rental value and re-letting risk. Capitalising a rent under a triple net lease requires a specific adjustment to account for the capex needed to maintain operational condition, which differs in both nature and frequency from maintenance works on an office building. Finally, the distinction between market value and value in use takes on particular importance here, because prohibitive migration costs and the imperative of continuity create for the operator a site value often far higher than the price a third-party purchaser would be prepared to pay.

Each of these points calls for its own methodological treatment, within the framework of RICS and TEGoVA standards, but which public benchmarks alone cannot reduce to a mechanical exercise. It should be noted that the dedicated RICS guidance, Valuation of Data Centres, published in 2011, was archived in October 2025 and is currently under revision, which reflects both the long-standing recognition of the segment as a distinct valuation category and the need to update the framework in the face of the rapid transformation of the asset. During this period of transition in standards, the rigour the valuer applies to justifying assumptions and explicitly defining the scope of instruction becomes all the more important.

The Paris region data centre market attracts considerable investment volumes in a transactional environment that remains opaque, where published comparables are scarce and financial models cannot be validated by market cross-checking alone. The valuer builds the value on assumptions about future rents, discount rates, capex and obsolescence. This element of assumption is unavoidable; what is not unavoidable is a lack of documentation and justification for those assumptions.

Valuation instructions in this segment involve close dialogue with technical due diligence, without replacing it or being confined to it. Strictly real estate matters (land base, easements, renewal conditions of the commercial lease where the site is leased, planning constraints on a future extension) can significantly affect value in the medium term.

The Île-de-France data centre market is going through a phase of rapid expansion, and the strength of demand can lead to certain structural weaknesses being underestimated. Three points deserve particular attention in any valuation.

Technological obsolescence is probably the most consistently underestimated risk, and its nature has changed since 2024. New generations of processors dedicated to artificial intelligence, starting with the Nvidia Blackwell architecture, reach power densities that make air cooling physically impossible and require direct liquid cooling at component level. Sites designed for air cooling, which still make up the majority of the Paris region stock, can be retrofitted for liquid cooling, but at a cost currently estimated at several million euros per megawatt and with significant structural constraints. JLL in fact identifies this adaptability as a value driver in its own right. A site whose technical envelope cannot support the transition to liquid cooling may lose a significant share of its rental value within a few years without the building itself having deteriorated. This disconnect between apparent property value and real economic value must be anticipated in the valuation, not observed after the event.

Liquidity risk calls for comparable caution. Liquidity is concentrated on a limited number of core assets that are well located, hold up-to-date certifications and are let to first-rate tenants on long leases. Outside this circle, the ability to sell a data centre under normal market conditions is more uncertain than it appears, and the depth of the secondary market in this segment has yet to be demonstrated.

Regulatory risk will grow in intensity. The requirements laid down in the EED, the announced roll-out of a European data centre rating scheme and pressure on water consumption and carbon footprint will structurally favour the best-performing sites and penalise those unable to adapt. This dynamic, already at work in the office market with the décret tertiaire (French commercial building energy-saving decree), will apply with comparable, if not greater, intensity to data centres.

In a market where demand is strong, players are numerous and data is scarce, independent property valuation carried out in accordance with RICS and TEGoVA standards demonstrates its value as a decision-making tool in an environment where sector enthusiasm cannot take the place of method.