The APAC data center construction market is one of the fastest-growing markets globally, with a value of USD 15.17 billion in 2022 and an estimated value of USD 24.17 billion by 2028. This growth is attributed to several factors, including government support for data centers, the development of multiple industrial zones, increased submarine cable connectivity, significant investments from cloud service providers, and the entry of global colocation operators in joint ventures in the region.
As the market potential grows, data center operators are exploring emerging markets such as the Philippines, Vietnam, and New Zealand. Additionally, many operators in the region are supporting government efforts to adopt sustainable energy practices by utilizing renewable energy, signing power purchase agreements, and committing to carbon-free operations.
KEY HIGHLIGHTS
– The rise of 5G service and the increasing demand for connectivity in new locations and tier 1 and tier 2 cities in various countries have spurred investments from edge data center operators. Companies such as EdgeConneX, Digital Edge, Leading Edge Data Centres, and Edge Centres are actively investing in multiple edge data centers across countries like Indonesia, Australia, Malaysia, the Philippines, Thailand, India, Vietnam, and others.
– There is a rising trend of interest in renewable energy among governments and operators in the APAC region. Nearly all countries in the region have launched initiatives to promote the adoption of renewable energy sources. For instance, Taiwan has set a goal of generating 20% of its electricity from renewable energy by 2025 through wind and solar PV promotion plans. Within the next five years, Taiwan is projected to achieve a renewable power capacity of over 26 GW.
– The APAC data center construction market is experiencing substantial growth in terms of connectivity, with the deployment of several upcoming submarine cables, including Asia Link Cable, SEA-H2X, Asia Connect Cable-1, Hawaiki Nui, 2Africa, and others.
KEY TRENDS
– The growing digitalization in the APAC region is becoming a key priority for governments across all countries, including Malaysia, Thailand, India, Australia, Japan, South Korea, China, New Zealand, and others. Many governments are announcing digital strategies to enhance the digital growth of their respective markets. For example, the Government of Australia has launched its Digital Economy Strategy 2022 Update with the goal of developing the country’s digital economy by 2030.
– Due to the significant growth potential and revenue opportunities in the APAC data center construction market, operators are actively investing in merger & acquisition deals and signing joint ventures for data center projects. As a result, many global organizations are entering the market through joint ventures. For instance, ESR Cayman and STACK Infrastructure collaborated to develop a data center in South Korea.
GEOGRAPHICAL ANALYSIS
– The APAC data center construction market is primarily led by China, with significant contributions from other major markets such as India, Australia, Japan, Singapore, and Hong Kong, among others.
– New Zealand’s high level of digitalization, coupled with the rollout of 5G technology, is expected to result in a significant increase in data generation and subsequent demand for data centers in the country. This rise in demand will be driven by the need for data traffic, storage, and computation capabilities. As a result, several cloud service providers are likely to establish cloud regions in New Zealand to expand their presence in the market.
– South Korea, Taiwan, Indonesia, and Malaysia are also emerging markets that are witnessing significant growth in the APAC data center construction market, mainly due to digitalization and connectivity. On the other hand, the Philippines, New Zealand, and Vietnam are also witnessing new investments in data centers, and are expected to grow as unique preferences for data center operators.
– Singapore has been a significant contributor to the overall investments in the APAC data center construction market, particularly in Southeast Asia. However, investments in the country slowed down due to a moratorium, which is expected to be lifted in 2022. As a result, it is anticipated that there will be a gradual increase in project announcements in the coming 2-3 years.
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