Amid the current conflict in the Middle East, digital infrastructure facilities are under attack for what appears to be the first time, a development that could have ramifications for real estate investment strategies.
US-Israeli forces struck Iran on February 28, assassinating Ali Khamenei, the supreme leader of Iran, and instigating the third Gulf war since the 1990s. Iran retaliated by attacking critical infrastructure in Gulf states, using missiles and drones in Bahrain, Oman, the United Arab Emirates and Qatar. Among the facilities that have been targeted are data centers.
On March 1, Amazon reported two of its data centers in the UAE had been struck by drones. The global technology company said a third center in Bahrain had been damaged by debris from a nearby strike.
The ongoing conflict was a major topic of discussion last week at MIPIM, the world’s largest real estate conference, held in Cannes, France.
In an interview with PERE during the event, Rachel Shone, managing director and EMEA real estate product specialist at Principal Asset Management, said the latest attacks could indirectly impact European data center strategies. With data centers becoming a new target in modern warfare, this will likely put greater importance on data sovereignty and residency, she said.
Shone: strikes on data centers in the Middle East have pushed data sovereignty and residency higher up the agenda
“Some of the first physical attacks on critical digital infrastructure, emerging from ongoing conflict in the Middle East, signal hyperscale data centers hosting data from Big Tech companies or major AI companies are particularly vulnerable to attack, given they may be used for crucial military data processing,” she said.
“As a result, you can expect to see indirect effects on the European data center market. Prior to the outbreak of the Iran war, there was already mounting pressure to have more data sovereignty in European nations, supported by developing EU regulation. Safeguarding data sovereignty in the EU is going to become more important than ever.
“This is likely to accelerate demand for domestically hosted cloud infrastructure and data center capacity within Europe, as governments and enterprises seek greater control over where sensitive data is stored and who can access it.”
In November 2025, the European Commission published its Data Union Strategy, aimed at making Europe’s data and AI developments more competitive on a global scale. A big chunk of the strategy, which was updated in December 2025, prioritizes the EU’s data sovereignty, a concept encouraging the protection of data flows as geopolitical tensions grow and international alliances weaken.
Given the increased tension in the Middle East, hosting data locally may become even more important to help reduce any impact volatile international alliances could have, Shone said.
“When geopolitical risk escalates and global warfare significantly weakens international relations, having European data hosted in Europe gives the continent greater control because it means it is not as reliant on other countries to access its own data. There is less risk of being impacted by a data center strike in areas under attack, and it gives Europe more independence and authority over its own data.”
Des Moines-headquartered Principal closed the first vintage of its opportunistic Principal European Data Centre Fund at €298 million in August 2023, according to PERE data. Last year, the manager closed its third discretionary data center-focused fund, the Principal Data Center Growth & Income Fund, which develops facilities for hyperscalers across the US, with $3.64 billion.
It remains unclear to what extent EMEA data center power supply growth will be impacted by the recent strikes in the Middle East. Those centers hit by the strikes represent a small part of the Middle East’s data center ecosystem, as per market intelligence platform DC Byte. Of the 233 data center developments in the GCC countries, five have been impacted so far, representing between 1 and 2 percent of the market, the firm reported last week.
The EMEA region is the smallest in terms of global data center power capacity, according to advisory firm JLL’s 2026 Global Data Center Outlook report, published in January. It predicted a 10 percent compound annual growth rate for total power supplied by data centers in the region between 2025 and 2030, fueled by strong demand for sovereign AI clouds to meet data privacy regulations.