According to a report by ResearchAndMarkets.com, the Southeast Asia data center construction market is expected to exceed $3 billion by 2028. The market may experience negative growth in 2022-2023 due to a decline in investments in the Singapore market after a moratorium, but the lifting of the moratorium and increased colocation demand in countries such as Malaysia, Thailand, Vietnam, Philippines, and Indonesia is expected to uplift the market’s growth rate.
Investment in the Southeast Asia data center construction market is driven by digitalization initiatives, connectivity growth, and the adoption of technologies such as 5G, big data, IoT, and artificial intelligence. The market is also seeing edge data center investments across several cities, such as Edge Centres’ EC61 facility in Thailand, with plans for additional facilities in the near future.
The region has robust connectivity with the rest of the world via existing submarine cables, and the increasing demand for connectivity has led to the deployment of new cables that will be ready for service in the coming years. The market’s need for efficiency, coupled with the adoption of advanced technologies such as artificial intelligence, has driven the adoption of liquid-based cooling solutions.
MARKET TRENDS & DRIVERS
Focus on Sustainability in the Region is Gaining Traction
One of the major trends in the Southeast Asia data center construction market is the increasing focus on sustainability. Governments across the region are taking initiatives to make the market more sustainable by promoting the adoption of green energy, reducing carbon emissions, introducing carbon laws and credits, and offering tax incentives for the use of renewable energy. Colocation operators are also pledging to be carbon neutral, and several are signing power purchase agreements to adopt green energy sources for their data center operations. For example, the Government of Malaysia aims to generate 31% of renewable energy out of total power generation by 2025, and ST Telemedia Global Data Centres has pledged to be carbon neutral by 2030. YTL Data Center in Malaysia has announced the development of a data center park powered by solar energy, with a total capacity of 500 MW, and the first phase is expected to be operational by Q1 2024.
5G Deployments Will Drive Edge Data Center Investments
The adoption of 5G services in Southeast Asia is driving the deployment of edge data centers in the region. Countries such as Singapore, Indonesia, Thailand, Malaysia, Philippines, and Vietnam have witnessed significant growth in 5G services, and the adoption of advanced technologies like 5G is expected to launch in other regional countries as well. This increasing demand for 5G services will drive the need for deploying edge data centers in tier 1 and tier 2 cities that have low connectivity or are in close proximity to established mega data center facilities. For example, Edge Centres is currently developing a pipeline of edge center facilities in several countries in the region, including Thailand, Malaysia, Vietnam, Indonesia, and the Philippines.
The report also notes that the market has a presence of both local and global construction service vendors, and colocation companies such as Digital Realty, Equinix, FPT Telecom, Iron Mountain, ST Telemedia Global Data Centres, and Big Data Exchange (BDx) dominate the market. Additionally, the market is witnessing data center investments from several new entrants, such as OneAsia Network, Pure Data Centres Group, Nautilus Data Technologies, EdgeConneX, and Edge Centres.
GEOGRAPHICAL ANALYSIS
It seems like the Southeast Asia data center construction market is experiencing significant growth, especially in countries such as Vietnam, Indonesia, Malaysia, and Thailand. New entrants and the expansion of China-based operators into the region have also contributed to this growth. While Singapore has historically been a major shareholder in investments in the market, the country faced challenges due to a moratorium in 2020 and 2021. Other countries, such as the Philippines and Vietnam, have also emerged as new locations witnessing an increase in investments for mega and edge data centers.
It’s interesting to see the focus on sustainability in the region, as well as the role of 5G in driving edge data center investments. The presence of both global and local vendors in the market also suggests a diverse range of expertise and solutions available.
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