Southern Europe's Tech Transformation Gains Momentum

Start-up hubs, data centres rising in Spain and Portugal amid strong economic growth

- Souwie Buis

MALAGA, Spain - Perched on the edge of Europe, the Iberian Peninsula looks out from the old world towards the new. This strategic position is one of its biggest assets in the bubbling tech transformation taking place in Spain and Portugal.

The burgeoning growth, specifically in data centres and start-up hubs, takes place amid the strong economic performance of southern Europe, which largely outpaced the north in 2023 and 2024. Spain was ranked as the best economy of 2024 by The Economist, while Portugal also performed above the European average.

Spain has the third-highest number of start-up hubs in Europe (15), after Britain (24) and Germany (16), according to a March report from the Financial Times (FT). Together, Spain and Portugal have 24 hubs, with two of those incubators ranked in the top 20 of Europe's start-up hubs.

Across the peninsula, cheap sustainable energy, rapidly expanding digital infrastructure and the ability to attract tech talent have underpinned the strong growth in data centres and tech hubs.

But as this tech transformation gains momentum, can the bureaucracy-burdened governments of the south keep up?

"Spain's most significant advantage is its unique combination of renewable energy leadership, strategic geographical position, and great concentration of talent," Mr David Blazquez, head of public policy infrastructure, energy and sustainability in Spain and Portugal at Amazon Web Services (AWS), told The Sunday Times.

Renewables now account for 66 per cent of Spain's installed power capacity, with solar and wind power contributing almost 27 per cent and 25 per cent respectively.

In the last decade, Spain's tech workforce grew twelvefold to 175,000, alongside an eightfold increase in funding growth of US$14.1 billion (S$18.3 billion).