Surging Euro narrows UK/Continental Colocation prices

After leading the European colocation market since the industry turn around in 2004/5, UK colocation prices have started to narrow the price gap with Europe when expressed in local currency terms. This is primarily a result of the Euros surge against both the British Pound and US Dollar over the past year, but an improving balance of supply in what remains one of the tightest European markets may also start to contribute to this trend.

Whilst pricing in Pounds or Euros has remained fairly constant over the past 12 months, after the dramatic increases of the previous two years, exchange rate movements have significantly closed the gap in pricing between the UK and mainland Europe, as the table below demonstrates:

Currency Rates	March 2007	March 2008
£/€	0.68	0.80
$/$	1.35	1.55
Colocation Prices (2kW cabinet, monthly)
London	£1000	£1000
Europe	€1000	€1000
Colocation Prices in £ or $
Europe in £	£680	£800 + 18%
Europe in $	$1350	$1550 + 15%

Tim Anker, founder and Director of The Colocation Exchange said “some of our overseas customers are beginning to realise that exchange rate movements combined with a much improved balance of supply versus demand in the key London market has led to a significant adjustment in their expectations about the London market. For example, one US law firm we’ve been working with for the past year pretty much ruled London out last year, but now realise that some of the deals emerging in the market combined with a steady exchange rate versus the Dollar has really put London back on the map as an economic and viable option once again”.

Notes

Colocation prices are estimates of The Colocation Exchange Ltd
European average pricing is based on Paris, Amsterdam and Frankfurt which combined with London equates to 80% of the European carrier neutral marketplace
The Colocation Exchange estimated occupancy across the London carrier neutral colocation market was 92% at end of 2007, compared with 98% in Paris, 83% in Frankfurt and 74% in Amsterdam

The Colocation Exchange Ltd - May 2008

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