Turkey's Data Center Colocation Market: A Strategic Opportunity Amid Digital Transformation

The global data center colocation market is witnessing a seismic shift, with emerging markets like Turkey positioning themselves as critical nodes in the digital economy. Turkey's data center colocation market, in particular, is emerging as a compelling investment opportunity, driven by rapid digital transformation, strategic infrastructure development, and a favorable regulatory environment. However, as with any emerging market, investors must balance growth potential against political, economic, and cybersecurity risks.

Infrastructure-Led Growth: A Convergence of Demand and Policy

Turkey's data center colocation market is projected to grow at a compound annual growth rate (CAGR) of 19.80% from 2024 to 2030, reaching a market size of USD 476 million by 2030Turkey Data Center Colocation Market Report 2025-2030^[1]. This surge is fueled by a confluence of factors: the adoption of artificial intelligence (AI) applications, government incentives for digital infrastructure, and the expansion of 5G connectivity. Istanbul, the country's economic and technological hub, currently hosts 19 operational colocation data centers, while cities like Ankara, Bursa, and Izmir are emerging as secondary hubsTurkey Data Center Colocation Market Report 2025-2030^[1].

Government support has been pivotal. The Turkish government has classified major data center projects as “strategic investments,” offering tax breaks, energy-efficient infrastructure support, and streamlined land allocationTürkiye’de Veri Merkezi Yatırımları (Data Center Investments in Turkey) – 2023-2025 Analizi^[2]. For instance, Turkcell's recent €100 million investment in data center expansion underscores the alignment between private-sector ambitions and state-backed incentivesTurkey’s Turkcell secures €100m for data center expansion^[3]. Additionally, Turkey's commitment to sustainability—aiming to reduce greenhouse gas emissions by 41% by 2030—has spurred data center operators to adopt renewable energy sources, such as hydropower, and implement eco-friendly construction practicesTurkey Data Center Colocation Market Report 2025-2030^[1].

Risk-Adjusted Returns: Navigating Political and Cybersecurity Challenges

While the growth trajectory is robust, investors must account for Turkey's political and economic volatility. Political instability, including recent court rulings targeting opposition leaders and the arrest of Istanbul Mayor Ekrem Imamoglu, has triggered currency depreciation and market uncertainty. The Turkish lira has weakened by over 9% against the U.S. dollar since the start of 2025, with the Central Bank forced to deplete $57 billion in reserves to stabilize the currencyAfter months of political drama, Turkish markets brace for next big test^[4]. Such macroeconomic pressures could elevate the political risk premium for long-term investments in the data center sector.

Cybersecurity threats also pose a growing challenge. The passage of the Cybersecurity Act in March 2025 reflects Turkey's efforts to align with international standards like the EU's NIS2 DirectiveTürkiye's Cybersecurity Outlook Key Insights from the 2025 National Cyber Threat Report^[5]. However, high-profile ransomware attacks on sectors like healthcare and finance, coupled with state-sponsored cyber threats from groups like Promethium, highlight the need for robust security frameworksTürkiye's Cybersecurity Outlook Key Insights from the 2025 National Cyber Threat Report^[5]. Data center operators are increasingly investing in AI-driven threat detection and multi-layered cybersecurity protocols to mitigate these risks.

Investment Metrics and Regional Comparisons

Turkey's data center market is attracting significant capital inflows. By 2025, $100 million is expected to be invested in new projects, with Istanbul accounting for 80% of upcoming power capacityTurkey Data Center Portfolio Report 2025: Turkey's Data Center Market to See $200 Million in New Investments by 2026^[6]. This figure is projected to double to $200 million by 2026, with Ankara emerging as a dominant hubTurkey Data Center Portfolio Report 2025: Turkey's Data Center Market to See $200 Million in New Investments by 2026^[6]. These investments are supported by Turkey's strategic location—bridging Europe, Asia, and the Middle East—and its expanding submarine cable network, which enhances regional connectivityTurkey Data Center Colocation Market Report 2025-2030^[1].

When compared to other emerging markets, Turkey's data center sector offers a compelling risk-return profile. While countries like India and Southeast Asia also exhibit strong growth, Turkey's CAGR of 19.80% outpaces many peersTurkey Data Center Colocation Market Report 2025-2030^[1]. However, its political and currency risks necessitate a nuanced approach. For instance, the market's sensitivity to lira volatility could be offset by hedging strategies or partnerships with international operators like Equinix and Vodafone, which are already expanding their footprints in TurkeyTurkey Data Center Colocation Market Report 2025-2030^[1].

Conclusion: A Calculated Bet on Digital Resilience

Turkey's data center colocation market represents a high-growth opportunity for investors willing to navigate its unique risks. The country's infrastructure investments, sustainability focus, and strategic location position it as a regional hub for digital transformation. However, political instability, currency volatility, and cybersecurity threats require careful risk management. For investors with a long-term horizon and a diversified emerging-market portfolio, Turkey's data center sector offers a compelling blend of growth potential and strategic value.