This joint venture will mark their entry into the Israeli market and broaden their ties in the Mediterranean region as well.
Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, and Mivne Real Estate (K.D.) (TASE: MVNE), announced the formation of a joint venture, entry into the Israeli market, and the planned development of a multi-tenant data center campus in Israel.
Digital Realty's position as the leading provider of digital infrastructure capacity in the broader Mediterranean region, including presence in Athens, Barcelona and Marseille, will be further enhanced by this new location. The joint venture, which will operate under the brand name Digital Realty Mivne, will serve as a strategic partnership of Digital Realty with Mivne, a market leading real estate developer, owner and operator that has developed many large-scale projects across Israel and has an extensive land bank.
Approximately half of the world's population resides within a 3,000-mile radius of the center of the Mediterranean. Telegeography notes that international bandwidth in the Middle East has seen over 30% compound annual growth since 2016, representing an overall increase in transmission capacity to the region of almost 200%. Israel is emerging as an alternative cable interconnect route between the Mediterranean Sea and the Red Sea, and the new campus will be located at a key intersection along the global internet highway across the Mediterranean region, connecting Europe to the west and Asia, the Middle East and eastern Africa to the east. This new route enhances the availability and resilience of international subsea cable systems. The first subsea cable systems to traverse Israel terrestrially have already been announced and further systems are anticipated.
Israel is also a global center for technology innovation and is regarded as the seventh most innovative country in the world, with the highest percentage of GDP spent on research and development and the highest venture capital (VC) investment per capita, with over 500 multi-national companies (MNCs) from 35 countries undertaking innovation in Israel. In addition, the four largest cloud service providers have all announced that they will be building cloud infrastructure in Israel. All of these macro trends are driving significant demand for digital infrastructure throughout Israel.
Digital Realty Mivne expects to develop a multi-tenant data center campus in Petah Tikvah, the primary connectivity hub in Israel. The data center campus will support the development of up to 20 megawatts (MW) of installed IT load. Delivery of the initial phase is anticipated in 2023, subject to customer demand.
"This collaboration marks the beginning of a new chapter for Digital Realty's operations, customers and partners in the Middle East. We expect this partnership to further accelerate our growth while enhancing our ability to support our customers' digital transformation across the globe," said Digital Realty Chief Executive Officer A. William Stein. "This partnership represents consistent execution towards new market entries. We are also gratified to partner with Mivne, leveraging its extensive experience as a local investor and operator. This announcement advances our strategy of developing strategic and highly connected, network dense data centers to strengthen and diversify Digital Realty's portfolio and expand our product mix and global footprint."
David Zvida, Chief Executive Officer of Mivne, added, "Entering the field of data centers is a strategic growth engine for Mivne. Due to Mivne's large and strategic land bank and its extensive geographical distribution across Israel, the joint venture will be able to develop strategically located, purpose-built data centers. This strategic partnership with a leading international operator such as Digital Realty, which has proven operating capabilities and extensive relationships with international customers and suppliers, will enable us to gain leadership in the Israeli data center market."