Data Centre Outlook in Asia

Rising Demand & Accelerating Growth

Asia’s data centre sector is in the midst of a major boom. Key drivers include:

• AI, Cloud & Digital Transformation: Rapid adoption of AI, machine learning, big data, SaaS, and cloud computing is pushing demand for hyperscale, high-capacity data centres.

• 5G & Connectivity: As connectivity improves, more data is generated and consumed, putting further pressure on infrastructure.

• Public & Private Investment: Governments and private investors alike are increasing their commitment — both through approving large projects and through supportive regulation and incentives.

Estimates show that data centre capacity in Asia-Pacific is expected to double over the next few years, particularly driven by Southeast Asia, India, and parts of East Asia.

Regional Hotspots & Emerging Markets

Some of the standout markets and dynamics include:

• Malaysia, Thailand & Japan: Predicted to lead in improving data centre capacity relative to population, with Malaysia seeing particularly strong momentum.

• India: Expected to attract significant investment, with capacity projected to grow substantially by 2030. Land availability, regulatory support, data localisation requirements, and large domestic demand are key drivers.

• Southeast Asia: Nations such as Indonesia, Malaysia, and Thailand are scaling up thanks to favourable regulatory environments, incentives, and cost advantages.

• Singapore, Japan & other mature markets: Remaining critical hubs, though constraints around land, power, cooling, and environmental pressures are shaping the development pipeline.

Key Trends & Strategic Shifts

• Hyperscale & AI-Ready Infrastructure: New data centres are being built or retrofitted for high-power, high-density requirements, with advanced cooling, redundancy, and power delivery.

• Edge Data Centres: Smaller facilities closer to end users are on the rise to reduce latency and improve performance.

• Sustainability, ESG, Power & Water Constraints: Energy use, renewable sourcing, cooling technology, and water consumption are under increasing scrutiny. Stakeholders are demanding stronger environmental performance.

• Financing & Bankability: Investors and lenders are focusing on pre-leasing, anchor tenants, risk management, and sustainability-linked financing structures.

• Regulation, Land & Permits: Securing power, land rights, and environmental approvals remains a complex challenge, with regulatory clarity often a bottleneck.

Challenges to Manage

Even with strong growth prospects, the sector faces key challenges:

• Power Supply & Grid Infrastructure: Growing demand is stressing power grids in several markets.

• Cooling & Water Scarcity: Climate pressures and environmental constraints make sustainable cooling solutions critical.

• Land & Site Selection: Scarcity and cost of land near urban centres, combined with zoning and compliance requirements, pose difficulties.

• Regulatory & Policy Risk: Shifting laws around data localisation, environmental standards, and ownership can impact projects.

• Speed of Build vs Technology Change: Rapid technological evolution means data centres must be designed with flexibility to remain relevant.

What to Watch in the Next 3–5 Years

• Greater emphasis on renewable energy procurement and on-site generation.

• Expansion of edge data centre networks to address latency and connectivity gaps.

• More green financing and ESG-linked investment mandates shaping project finance.

• Proactive government policies to attract investment while balancing sustainability.

• Rising demand for AI-ready space, with new builds and retrofits designed for very high power densities.

Conclusion

The data centre landscape in Asia is evolving rapidly, making it one of the strongest global growth stories. Driven by AI, cloud computing, and the digital economy, the opportunity is immense. Success, however, will come to those who invest not only in capacity, but in the right capacity — sustainable, strategically located, flexible in design, and backed by robust financing and regulatory support.