Asia Pacific will become the world's largest data center region in the coming decade, according to Cushman & Wakefield’s 2022 Data Centre Global Market Comparison report. Singapore, Hong Kong, and Sydney rank among the top 10 data center markets globally, with Singapore second only to Northern Virginia (which has occupied the number one spot for three consecutive years).
Investment in the APAC data center market totaled $65.15 billion for 2021 (round 35 percent growth on 2020) and is predicted to reach $94 billion from 2022 to 2027. The market has been dominated by colocation providers that provide internet and cloud service providers with space wholesale.
But recently, hyperscale operators have been building their own capacity, with tech giants like AWS, Microsoft, Meta, Alibaba, and Tencent making a significant investment in the region. And some Asian governments are also actively involved in facilitating the growth of data center capacity in their countries. It's noteworthy, though, that 60 percent of APAC data center investments in 2021 went to Singapore, Tokyo, Osaka, Sydney, and Beijing.
Anticipated Market Growth 2022 to 2027
China's new technology initiatives, which focus on AI, big data, and cloud computing, promise good returns for data center investors. But global commodity inflation is driving up the costs of construction—up to 11 percent in the last year in both Beijing and Shanghai, primarily driven by increases in steel, copper, and aluminum.
Market researcher Arizton estimates $35 billion will be spent on data centers and related infrastructure in China between 2022 and 2027. Its research identified more than 70 data center projects in the country. And in September last year, Chindata also committed to a national renewable power project by purchasing 100,000 MWh of renewable energy.
Chinese operators are still the dominant players in this market, but foreign operators are gaining market share. For example, Apple has expressed its intention to expand its facilities in China, and Tesla will be building a data center to store data from Chinese vehicle sales. And newcomers Mapletree and ECR Cayman are developing their first data centers in Hong Kong.
GDS continues to be a strong presence in the region, with six new data centers online already and construction starting on five others. And while Microsoft will add four new data centers in early 2022, Amazon announced the second phase of its Ningxia region, which will more than double its current capacity.
The Japanese market is seeing significant hyperscale data center development. Over 15 MW is expected from planned and current construction initiatives on full-build.
Last year Equinix, AirTrunk Operating, Digital Edge, and Digital Realty were among the major investors in Japan. In addition, ESR Cayman, KYOCERA Communication Systems, Lendlease, Marunouchi Direct Access, Princeton Digital Group (PDG), SCSK Corporation (netXDC), and Vantage Data Centers are also invested in Japanese data centers with project completions due before 2025.
An estimated 2,000 MW will be added to data centers across India between 2022 and 2027. Hyperscale facility investors include several newcomers, like AdaniConneX, BAM Digital Realty, Ascendas India Trust, EverYondr, Equinix.
And local governments are also actively encouraging data center investment in various states. Examples include the $100 million contract between data center operator Web Werks and the Karnataka government to construct a new data center in Bangalore.
An estimated $1 billion year-over-year investment is forecast for Australia. Multiple projects were announced in 2021, including a 300MW Sydney site and the expansion of a 150MW hyper-scale site in Melbourne.
And despite a moratorium on new builds, Singapore remains an essential location for data center deployment. This is thanks to its strong ecosystems, excellent connectivity, consistent demand.
Secondary APAC Data Center Markets
Finally, Cushman & Wakefield’s report cautions investors not to dismiss secondary markets which continue to proliferate. It predicts many of these will skip directly to primary market size from 2022 to 2027.
Currently, APAC’s secondary data center markets include Jakarta, Osaka (as opposed to Tokyo), Seoul, and several sites across India. According to the study, American and Chinese hyperscalers are vying for market share in these secondary markets, although most want to grow through the APAC region.
Turner and Townsend point out that Indonesia is Southeast Asia’s most populous country. Its favorable demographics and the government's focus on digitizing the economy make it a high-potential investment. Several major tech companies, including Microsoft and AWS, have invested there.
They also note Google and Microsoft’s expansion in Taiwan. Google plans a third data center in Yunlin county for approximately $716.2 million, and Microsoft has announced an Azure cloud region to be developed in the country.
With its increasing domestic demand, robust data protection laws, and data storage infrastructure, the island nation is set to be one of APAC’s data center hubs. However, the current pace of investment is reportedly placing strain on the local labor market.