The rapid growth of data center services in the Asia Pacific (APAC) region is the focus of the Q1 2023 Data Center Report by Knight Frank, the largest independent global property advisor. The recently released report, created in partnership with DC Byte, the leading data center research and analytics platform, delivers valuable insights into the key APAC markets, such as Tokyo, Shanghai, Sydney, Singapore, Hong Kong, Mumbai, Seoul, Kuala Lumpur, and Bangkok, providing unique perspectives for those looking to tap into the region’s thriving data center market.
Across the nine markets researched, the total capacity surpassed 13,400MW in Q1 2023, an increase of 425MW from the beginning of the year.
“Despite well-documented barriers to data center development in the more established markets across the region, significant capacity is still being added as demand for cloud services continues to be strong,” said James Murphy, APAC Managing Director at DC Byte. “In the past, this demand would have been contained to a few markets but we are increasingly seeing new cloud regions and availability zones being established in new markets which accounts for the significant growth in both supply and demand regionally.”
Mumbai Emerges as a Thriving Market
Mumbai stands out as a prime example of the region’s growth, with a significant expansion of its total capacity in Q1 2023, surpassing the 2,000MW milestone. With more than 40% of Mumbai’s live capacity absorbed in 2022 and supply movements moderated, the market showcases strong demand for potential future growth.
Navigating Supply Chain Constraints in Singapore
While Singapore faces supply chain concerns and government decisions, it remains an attractive market due to its robust demand from leading cloud providers and financial institutions.
Promising Growth in Bangkok and Kuala Lumpur
Data center markets in Bangkok and Kuala Lumpur also offer promising growth. Bangkok has experienced notable growth, with capacity surging by nearly 30% since the beginning of the year. This growth is fueled by strong absorption rates observed in 2022. Multiple operators are actively expanding their presence in the city, capitalizing on favorable market conditions. Kuala Lumpur has experienced substantial growth as well. The growth seen in Q1 matched a third of the supply growth seen in the market all last year.
Unlocking Investment Opportunities
The APAC data center market presents diverse investment opportunities for those seeking to diversify their portfolios and explore emerging markets. Various investor types, including growth capital, buyout, real estate, and infrastructure investors, have shown interest in the region’s data center sector.
“As data center gain prominence as an asset class, investors are leveraging various strategies such as mergers and acquisitions (M&As), joint ventures, and land acquisitions to tap into this thriving sector,” said Fred Fitzalan Howard, Data Center Lead APAC at Knight Frank. “We anticipate notable trends including increased M&As and land acquisitions in emerging Tier 2 cities, a growing emphasis on data residency and sovereignty, persistent supply chain disruptions and delays, and a heightened focus on sustainability in data center development. Recognizing that data centers encompass more than just physical infrastructure; these projects require expertise in areas such as real estate and digital infrastructure.”