Asia Pacific - May 2024

S P OT L I G H T
Asia Pacific
Savills Research
Data Centres
 Asia Pacific Data Centres

Asia Pacific data centre

demand at an all-time high
RAPID EXPANSION FOR ALL TYPES estimated that the APAC colocation data been aggressively leasing and developing
OF OPERATIONAL DATA CENTRES centre market size was around 10,233MW of hyperscalers and these three frontrunners
The Asia Pacific data centre industry critical IT capacity in 2023 and is projected to now account for 60% of all hyperscale data
continues to demonstrate robust and grow at a five-year compound annual growth centre capacity worldwide. According to
dynamic growth with no signs of a rate (CAGR) of 13.3% to 19,069MW by 2028, Synergy Research, global hyperscale data
deceleration. Growth is being driven indicating a formidable momentum. centre capacity will double in the next
by digitalization, the adoption of cloud The emergence of artificial intelligence four years, with around 120 to 130 facilities
computing and other data-intensive services, (AI), especially the release of ChatGPT launching each year. The scale of these new
the proliferation of 5G networks and The and other generative AI tools has further projects on average will be more than double
Internet of Things, as well as regulatory boosted the demand for this sector, the capacity of current facilities, in order to
policies mandating local data storage. Over particularly for hyperscale data centres accommodate AI operations. The increase
the past few years, the region has already which have a substantially larger critical IT in power requirements is another factor
seen significant expansion of data centre capacity. A wave of tech giants like Amazon shaping the investment landscape.
infrastructure. Structure Research has Web Services, Microsoft, and Google have
INVESTMENT IS HOTTER THAN EVER
In an environment where interest rates seem
to be ‘higher for longer’, with the Federal
Reserve postponing rate cuts, the pursuit
GRAPH 1: Number of Data Centres in Asia Pacific by Market, Q1/2024 of yield has intensified amid the mounting
macro uncertainty. As a result, the data
centre market has emerged as an exciting
500
alternative asset class, offering better returns
450
alongside plenty of growth potential. We saw
400 considerable capital funnelled into the sector
350 throughout the pandemic, but the influx has
surged even further in Q1/2024. Asia Pacific
300
NUMBER

data centre acquisitions topped US$1.7

250
billion during the quarter, up 81% QoQ and
200 325% YoY, accounting for 80% of the total
150 investment volume for the full year of 2023.
100
The biggest transaction took place when
a group of institutional investors, including
50
Hillhouse, Rava Partners, Boyu, Princeville
0 Capital, Tekne Capital among others
acquired a 43.9% stake in the international
data centre business of the Chinese data
centre operator GDS by subscribing to
Source Cloudscene US$587 million Series A convertible preferred
shares. The portfolio comprises 330 MW of
data centre capacity in service and under
construction outside Mainland China, and a
GRAPH 2: Global Hyperscale Data Centre Capacity by Market, Q4/2023
further 340 MW held for future development
across strategic locations such as Hong Kong,
Singapore, Malaysia (Johor), and Indonesia
(Batam). Valued at an enterprise level at
China, 16% US$2.3 billion, the deal banked on the full
delivery of the existing and upcoming pipeline.
There have been two other deals worth
noting. An entity linked to Singapore-based
operator Big Data Exchange (BDx) acquired
US, 51% Rest of APAC, 10% a freehold industrial building, OneTen Paya
Lebar, from Hwa Hong Corporation Group
for an estimated US$104 million. The eight-
story property currently houses BDx’s SIN1
Europe, 17% data centre, which offers 9.6MW over a gross
floor area of 14,450 sq m. Both land and
power supply for data centre developments
Rest of are very limited within Singapore, despite
World,
5% the lifting of a four-year moratorium.
According to DC Byte, Singapore’s
Source Synergy Research Group

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 Asia Pacific Data Centres

colocation data centre live IT capacity

currently stands at 1227MW and is currently
close to full occupancy, with a peak vacancy
rate recorded at 1.89% in 2022. Although
smaller in size compared to typical new data
Asia Pacific’s data centre industry
centres coming online these days, the buyer is booming amid technological
paid a sub-4% yield for the acquisition, as
owning the freehold will give them greater advances and a surge in investment
flexibility to redevelop the facility to cater to
their clients’ evolving needs.
interest, but is being challenged by
Meanwhile, Australian-based Macquarie resource constraints, prompting new
Data Centres bought the Intellicentre
campus in Macquarie Park, Sydney from markets to emerge.
Keppel DC REIT for US$119.8 million.
Keppel DC REIT divested the asset at an
exit cap rate of approximately 3.6%. The
campus includes the existing Intellicentre
2 and Intellicentre 3 East centres, occupied THE FIGHT FOR LAND AND POWER Another key consideration is the high
by Macquarie Telecom on a 20-year master RESOURCES POSES GROWTH energy consumption of data centres,
lease. This acquisition will give the operator CONSTRAINTS particularly larger hyperscale facilities.
more control over the campus as they plan to While the data centre market has received a As more projects are delivered, so demand
construct a third centre, IC3 SuperWest, to great deal of attention with a large amount of for power increases, which can potentially
meet expansion needs. capital directed at it, the difficulty in securing strain local power grids and lead to delays in
In a new market trend, we have seen suitable land and acquiring a reliable power latency and other operational issues. This is
local government putting a stop to new supply have raised some sustainability and often a reason why site selection is a crucial
construction out of sustainability and scalability concerns. part of success when expanding in emerging
energy supply concerns. As such, investors Data centres require proximity to markets like India and Indonesia.
are turning to emerging markets with more essential infrastructure such as power The scramble for land and power
accommodative policies such Malaysia, grids and internet backbone connections. resources has pressured participants to
Indonesia, India and even Vietnam and this Securing suitable land which meets these scale in strategic locations as soon as
has been reflected in transaction flows. criteria without venturing too far from the possible, and this has continued to drive
In terms of geography, 36% of transaction urban business area or cloud regions has up development costs. A study by Turner
volume took place in Malaysia during become increasingly hard in developed and Townsend reveals that Tokyo was the
Q1/2024, followed by Japan (23%), Hong markets, especially those with tighter most expensive market worldwide to build,
Kong (16%) and Indonesia (14%). Meanwhile, planning restrictions and more legacy with costs hitting US$13.7 per Watt in 2023.
investors have continued to divest from infrastructure. Tokyo, Singapore, Hong Zurich and Silicon Valley took second and
relatively more developed markets such as Kong, and Seoul are among the markets third place. Within Asia Pacific, Singapore
China and South Korea. grappling with a scarcity of suitable land. ranked as the second most costly, at US$11.4
per Watt, with Jakarta and Kuala Lumpur
not far behind at US$10.5 and US$10.0
respectively.
Amidst this cost surge, there is
also mounting pressure from various
GRAPH 3: Asia Pacific Data Centre Transaction Volume by Market, Q4/2021 to stakeholders including governments,
Q1/2024 clients, and broader society, for data centres
to utilize renewable energy sources and
Malaysia Japan Hong Kong Indonesia Singapore minimize their carbon footprint. However,
Australia New Zealand China India Others sourcing sufficient renewable energy to meet
2,500
the demands of large-scale data centres
can be problematic, particularly in regions
2,000 where renewable energy infrastructure is
underdeveloped.
US$ MILLION

1,500 While AI technology is expected to spike

data centre demand, it has also introduced
1,000 a new set of challenges. AI data centres are
estimated to consume two to five times
more electricity than those hosting cloud
500
applications, primarily due to the higher
power requirements of graphics processing
0 units (GPUs) compared to traditional
central processing units (CPUs). The latest
generation of individual Nivida GPU chip
can use as much or more power than entire
Source MSCI Real Capital Analytics
Note Only includes transaction size over US$10 million cloud servers. The vast majority of the
existing colocation sites cannot support this

3
 Asia Pacific Data Centres

GRAPH 4: Data Centre Construction Costs by Market, 2023 underwater data centres as part of their
five-year economic plan, indicating China’s
commitment to building a sustainable and
Tokyo
Zurich efficient data infrastructure.
Silicon Valley As sea levels rise and space on land is
New Jersey
at a growing premium, some companies
Singapore
Portland are exploring the concept of floating data
Jakarta centres. The first commercial project was
Chicago
North Virginia launched by Nautilus Data Technologies, a
London US-based start-up. It consisted of vessels
Seoul
carrying server racks placed on a barge
Kuala Lumpur
Saudi Arabia floating in the Port of Stockton in California.
Frankfurt This prototype showed a 30% decrease
Oslo
Auckland in the energy consumption required for
Berlin cooling. The mobility of these barges implies
Copenhagen
easy module deployment and replacement,
Sydney
Stockholm promising cost-effective maintenance and
0 2 4 6 8 10 12 14 16 scalability. Their natural buoyancy can also
US$ PER WATT eliminate any flooding concerns, reducing
Source Turner & Townsend the chances of equipment being damaged.
Subsequent expansions by Nautilus to Los
Angeles and across the Atlantic to Marseilles
signify a growing confidence in floating data
centres. Meanwhile, in Singapore, Keppel
level of power density, assuming 40-80kW in western Tokyo which will mark Keppel’s Data Centres has also ventured out to sea
per 42U rack, and retrofitting the existing first data centre project in the country. after their US$10 million investment in
infrastructure is a costly and challenging However, the question arises whether Nautilus. The company has recently received
task as GPUs also generate significantly data centre development will be constrained approval to build a floating data centre
more waste heat than CPUs. The HVAC- by location in the hunt for resources? In park in Singapore, potentially powered by
based cooling solutions are sufficient for response, we have seen some innovative liquefied natural gas and hydrogen. The
CPU server rooms with up to 30 kW rack and sustainable solutions emerging, such master plan includes an entire marina filled
power densities but fall short for GPU racks as undersea and floating data centres, to with floating data centre modules sharing a
with a power density exceeding 40kW. This address these concerns. floating power-generation module.
type of rack room requires liquid cooling The viability of undersea data centres was Compared to the facilities on the land,
which is extremely resource-intensive to first explored by Microsoft with its Project water-borne data centres are more cost-
operate. Microsoft reportedly consumed 6.4 Natick experiment, which has tested two efficient and sustainable. It is also much
million cubic metres of water to cool its data underwater prototypes in California and easier to scale operations and customize to
centres in 2022, reflecting a 34% jump from Scotland respectively since 2015. Locating customer demand as there are no constraint
the previous year, thanks to its intensive AI data centres underwater near coastal cities on land.
development efforts. For regions facing water could improve latency as a majority of the Yet, despite these advantages, both
scarcity, this type of development may not be world’s population lives within 120 miles concepts are still at a nascent phase and
profitable to run despite the robust demand. of the coast. The servers in Microsoft’s have yet to be commercialised. Many of
The high upfront costs, power tariffs, undersea data centre proved to be eight these projects are either self-built facilities
as well as operational and maintenance- times more reliable than their land-based run by the tech giants or government-driven
related costs have made data centres a counterparts. According to Subsea Cloud, initiatives. The tried-and-true land-based
capital-intensive investment. As a result, undersea data centres could reduce latency data centres continue to dominate in the
we are seeing more collaborations between by up to 98% and cut power consumption commercial field. Developed markets like
institutional investors and data centre and emissions by 40%. This concept is Australia and Japan remain hotspots for
operators to accelerate expansion. For finding traction in Asia Pacific too, with investment, underpinned by advanced
example, mainland China-based GDS China trialling it along its coast. infrastructure and strong local demand.
raised US$587 million through an equity The Highlander Company launched a But as the scale of development expands,
transfer deal, whereas KKR committed four-rack test vessel in Zhuhai in early emerging markets present more growth
up to US$800 million to acquire a 20% 2021 and went live with China Telecom opportunities, potentially giving rise to new
stake in Singtel’s regional data centre data on the servers later that year. This regional clusters in the long term.
business. The proceeds will be used to fund initial success soon bred further strategic
expansion across ASEAN markets, including alignments when the firm joined hands RAPID EXPANSION AHEAD IN
Singapore, Indonesia, and Thailand, while with the state-owned Assets Supervision SOUTHEAST ASIA
exploring markets like Malaysia. Apart from and Administration Commission and The Southeast Asian region is quickly
direct investments, strategic partnerships Hainan Information Investment to develop catching up, with global and local players
have started to be forged, seen in the the world’s first commercial project, a expressing an interest in establishing and
collaboration between Keppel DC and massive 1,300-tonne project consisting of enhancing their presence. Industry forecasts
Mitsui Fudosan, who aim to tap into the 100 vessels off the coast of Hainan Free from Kearney suggest a bullish scenario for
opportunities in Japan and Southeast Asia. Port. Subsequently, Hainan and Shandong the data centre colocation sector, which is
The duo has agreed on a proposed forward provinces, as well as the two cities of Xiamen expected to grow at a CAGR of 16.5% over
purchase of an under-development facility and Shenzhen have all included developing the next five to seven years, expanding from

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 Asia Pacific Data Centres

1,100MW in 2021 to 2,674MW in 2026. This government actively supports data centre run, TNB sees potential maximum electricity
robust growth trajectory is set to eclipse the growth by offering various tax incentives and demand from data centres reaching more than
global rate of 11.6%, attracting a significant subsidies, including 100% tax exemptions 5,000MW by 2035.
influx of capital ranging from US$9 billion to for eligible data centres and cloud business At the moment, the dominant player in the
US$13 billion. investments. The supportive policy, relatively Malaysian market is AIMS Data Centre, taking
lower cost of entry, the abundance of land and up most of the market share across different
Malaysia electricity at competitive prices, as well as regions within the country, followed by TM
Malaysia is one of the fastest-growing good basic infrastructure have made Malaysia One, NTT Global Data Centre and Bridge Data
markets, boosted by robust demand from a development hotspot. Centre. In recent years, we have also seen
Singapore and the rest of the Southeast Tenaga Nasional Bhd (TNB), the largest more international companies, including GDS,
Asia region. The country is currently electricity utility in Malaysia, had reportedly Yondr, Vantage Data Centre, YTL Data Center,
connected to 29 submarine cable networks received 74 supply applications from data AirTrunk, and Equinix, entering the field.
with 14 landing stations, offering excellent centre customers representing total maximum In terms of geography, the major clusters
connectivity to the rest of Asia. A total demand in excess of 11,000MW in Q1/2024. are located in Greater Kuala Lumpur (which
investment of RM1.65 billion is dedicated to While not all the projects will be implemented, includes Cyberjaya), Johor in Iskandar
enhancing international submarine cable the group is expected to deliver electricity for Malaysia, Penang and Kuching. Greater
network connectivity, laying the foundations nine data centre projects with a total energy Kuala Lumpur is the largest market with
for further expansion. The Malaysian demand of up to 635MW in 2023. In the long about 37 facilities, contributing to around
75% of existing capacity, though Johor is
quickly catching up in volume by capturing
the overflow demand from Singapore. While
TABLE 1: Notable Data Centre Occupiers in Malaysia by Region, 2024 the datacentre development moratorium
in Singapore was recently lifted, new
expansions are still subject to scrutiny and
REGION NOTABLE OCCUPIERS will probably be limited to a certain subset
of operators. Rising costs and licensing
hurdles have shifted the growth momentum
Northern Region
to nearby locations like Johor in Malaysia
(Penang & Perak) and Batam in Indonesia.
Johor is increasingly seen as a budding
regional hyperscale hub, with expectations
of over 700MW in supply joining the
Central Region grid between 2024 and 2025, sporting an
(Greater Kuala Lumpur) average size of 80MW. Local submarkets
such as Nusajaya Tech Park and Sedenak
Tech Park are the epicentres of these new
projects. Some of the more notable market
Southern Region activity over the past six months includes
(Iskandar Malaysia) YTL Power International’s partnership
with US Tech firm NIVIDA to build AI
capabilities into its 500MW campus, YTL
Source Savills Research & Consultancy
Green Data Center Park, in the Iskandar
region. The NVIDIA installation will be
powered by on-site green energy, with YTL
building a 300MW solar farm on location.
MAP 1: Malaysia Data Centre Distribution by Submarket, 2024
Once completed, this project will become
Malaysia’s first data centre campus to rely
on solar energy for power. Meanwhile,
1 Singapore-based ST Telemedia Global
Data Centres (STT GDC) revealed plans to
3 develop a 120MW green data centre campus
in Nusa Cemerlang Industrial Park. Planned
to span approximately 89,040 sq m, the
1
STT Johor data centre campus will feature
a smart energy management system, AI-
enabled cooling and eco-friendly building
materials, aiming to carry out carbon-
37 2 neutral operations. Moreover, AirTrunk
is also preparing to establish a hyperscale
2
facility which employs an inventive cooling
7 6
system, which combines direct-to-chip
Existing Supply liquid cooling technology with an indirect
Upcoming Suply
evaporative cooling system, potentially
resulting in a 20% reduction in energy
consumption for its project AirTrunk(JHB1)
Source Savills Research & Consultancy
in Johor Bahru.

5
 Asia Pacific Data Centres

TABLE 2: Malaysia Data Centre Supply Pipeline, 2024 As Singapore’s policies continue to cap
land-based data centres development,
investor and operator interest is expected to
CAPACITY ESTIMATED continue tilting towards Malaysia. With its
PROPERTY LOCATION
(MW) COMPLETION
proactive approach to large-scale, sustainable
development, Malaysia is poised to solidify its
YTL Green Data Center Park,
Sea Data Centre (JDC1) 72 2024 position as a leading market for data centre
Kulai, Iskandar Malaysia
operations in the Southeast Asian region.
GDS and YTL Power YTL Green Data Center Park, 2024
NA
International Berhad Kulai, Iskandar Malaysia (Phase 1) Indonesia
Indonesia is another growth engine for the
AirTrunk (JHB1) 50 2024
Johor Bahru, Iskandar Malaysia data centre market in the Southeast Asia
Data Centre (Phase 1) (Phase 1)
region. With an ambitious national vision,
International Business aiming to capture 40% of the ASEAN digital
Exchange (IBX) Nusajaya, Iskandar Malaysia NA 2024 economy by 2025, the market is expecting to
Equinix Data Centre (JH1)
see more data centre developments as digital
Sedenak Tech Park (STeP), transformation gathers pace. Supported
Yondr Data Centre 200 2024
Iskandar Malaysia by the country’s growing digitalisation
demand, high internet penetration rate,
Open DC Delapan Economic Zone, Perlis NA 2024 strong government support, accommodative
policies and ease of market entry, Indonesia
has continued to attract foreign investment.
Sedenak Tech Park (STeP),
K2 Data Centre JHR1
Iskandar Malaysia
300 2024 For example, Microsoft recently announced
that it will invest US$1.7 billion over the
MN Holdings Berhad and
Sedenak Tech Park (STeP), next four years in the development of cloud,
Shanghai DC-Science 120 2024
Iskandar Malaysia data centres and AI services, marking the
Co Ltd
company’s largest single investment in its
ST Telemedia Global Data
2.8 29-year history in Indonesia.
Centres (STT GDC) and Cyberjaya, Greater KL 2024
(Phase 1) There was a total of 61 data centre
Basis Bay
facilities located in Indonesia in 2023,
Sedenak Tech Park (STeP), 60
PDG Data Center JH1 2024 spanning 474,000 sq m. While supply is
Iskandar Malaysia (Phase 1)
spreading to new areas, the majority of the
Source Market sources, Savills Research & Consultancy existing pipeline is still concentrated in
Jakarta and West Java. These two regions
have some of the best-in-class projects with
specifications up to Tier IV, occupied by
dominant operators like Keppel Data, NTT,
MAP 2: Indonesia Data Centre Distribution by Submarket, 2024 DCI, Princeton, Equinix, Telkom, IDC, Logos
and Amazon.
Major constraints hindering data centre 16
Existing Data Centre investment in Indonesia include a lack of
Future Data Centre
network infrastructure and an unstable
power supply, particularly in rural areas.
Medan
As such, developments have so far been
concentrated only in the major cities.
Therefore, most of the existing data centre
Manado
Batam projects are still largely concentrated
Pekanbaru
around the Greater Jakarta region. Stock
wise, the Greater Jakarta market will have
Balikpapan
151.5MW of total colocation capacity by the
Palembang end of 2023, with this number jumping to
192.2MW in 2024 and climbing to 462.8MW
in 2028. With this spike in supply, this area
Lampung is seeing temporary oversupply in the near
term, leading some investors to sell their
Tegal
Surabaya landbanks.
Makassar
While investment in Jakarta may have
Serang Bali
cooled, the momentum has since shifted
Jabodetabek
to other cities such as Surabaya, Bandung,
Bandung Solo
Bali and Batam. Of these, Batam, an island
Yogyakarta just 20 km south of Singapore, is rapidly
emerging as a strategic hyperscale market.
Source Savills Research & Consultancy
The Indonesian government has designated
one region in Batam, Nongsa Digital Park,
as a Special Economic Zone to promote the

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 Asia Pacific Data Centres

development of the digital economy, where Digital Park, boosting total capacity to over Vietnam
companies are eligible for a 100 percent 200MW. Meanwhile, local operator Telkom Vietnam is also growing rapidly in the
reduction in corporate income tax if they Indonesia has formed a strategic partnership region, with its market value forecast to
invest 100 billion rupiah (US$6.56 million) with Singtel and Medco Power and is grow to US$1.04 billion by 2028, up from
for a period of 10 years. building a 51MW hyperscale campus in Kabil US$561 million in 2022 and representing
With its strategic location, abundant Integrated Industrial Estate. a CAGR of 10.7%. Steered by government
power supply through both conventional Looking ahead, we expect to see more initiatives to pivot the country as a crucial
and renewable sources and attractive tax local and international players entering digital hub in the region, Vietnam is
tariffs, Batam has attracted around 291MW the market. Overall, Indonesia’s data accelerating its digital transition. The
of data centre development. For example, centre market capacity is set to increase government-backed Digital Transformation
a number of international operators, such from 514 MW in 2023 to a sizeable 1.41 GW Program aims to transition 50% of
as Data Center Frist (30MW), Princeton in 2029. More hyperscale facilities are businesses to digital platforms by 2025.
Digital Group(96MW), GDS (28MW) and being developed outside Jakarta in Bekasi, Vietnam’s 5G connectivity supports edge
BW Digital (80MW) have announced their Karawang, Bogor and Batam, reshaping the data centre deployment and offers last-mile
hyperscale development plans in the Nongsa data centre landscape in Indonesia. connectivity and lower latency services.
According to our data, Vietnam has 33 data
centres with a total of 48 service providers,
and an estimated capacity of about 80MW
TABLE 3: Batam Data Centre Supply Pipeline, 2023 to 2025F as of Q1/2024. The major hubs are located in
Hanoi and Ho Chi Minh City, hosting 16 and
DATA 13 established facilities respectively. In terms
CAPACITY ESTIMATED
CENTRE INVESTOR LOCATION
(MW) COMPLETION
of geographical distribution, the northern
OPERATOR and southern regions account for 94% of
Data Center Data Center First, Nongsa Digital Park, existing supply and the central region only
30 Q4/2023
First Gaw Capital Partners Batam accounts for merely 6%. The country has
five existing submarine cables connecting to
Princeton Princeton Digital Nongsa Digital Park, APAC and EMEA countries and the US. Two
96 NA
Digital Group Group Batam
upcoming cables expected between 2023 and
2024 include Asia Direct Cable (ADC) and
Telkom Indonesia, Kabil Integrated 2025
NeutraDC 51 Southeast Asia-Japan Cable 2 (SJC2).
Singtel, Medco Power Industrial Estate, Batam (Phase 1)
The current data centre landscape in
GDS, Indonesia Nongsa Digital Park, Vietnam is dominated by a handful of local
GDS 28 2024
Investment Authority Batam telecommunication companies including
Viettel IDC, VNPT, CMC Telecom, FTP
Gaw Capital Partners, Nongsa Digital Park, Q4/2024 Telecom and VNG Cloud. Meanwhile, foreign
TBC 6
Sinar Primera Batam (Phase 1)
operators, such as GDS, Telehouse and NTT,
who tend to enter the market through joint-
BW Digital, Nongsa Digital Park,
BW Digital 80 NA venture partnerships, account for a much
Citramas Group Batam
smaller share of the market.
6 Source Market sources, Savills Research & Consultancy However, we have seen a surge in enquiries

MAP 3: Vietnam Data Centre Distribution by Submarket, 2024

Binh Duong

Da Nang

Hanoi

Ho Chi Minh City

Data Centre Location

Number of Data Centre

Source Map data ©2024 Google, Market sources, Savills Research & Consultancy

7
 Asia Pacific Data Centres

GRAPH 5: Vietnam Data Centre Distribution by Operator, 2024 US$1.44 billion by 2029, reflecting a CAGR of
13.1% in the coming six-year period.
VNTT
VNNIC 3% Viettel IDC OUTLOOK
3% 21% With digital transformation accelerating
USDC across industries, e-commerce services
3%
expanding their reach, and new technology
Telehouse
3% transforming our lives, the demand for data
One Solution centre capacity seems endless in Asia Pacific,
3% cementing the region’s position as a pivotal
NTT VNPT player in the global data economy. This
3% 21%
robust expansion is attracting considerable
MetaServ investment, with the sector emerging
3%
as an exciting asset class amid global
HTC-ITC
3% macroeconomic uncertainties.
HANEL-CSF However, the industry also faces a number
3% CMC of challenges related to energy consumption,
GDS VNG 9%
3% Cloud land acquisition and sustainability concerns.
Edge Centres FPT
6%
9% With the global push towards net-zero
3%
emissions gaining momentum, data centre
Source Market sources, Savills Research & Consultancy
operators are under increasing pressure
to balance operational demands with
environmental responsibility. The market has
from foreign operators looking for locations The Vietnam Ministry of Information and
seen more efficient design solutions with the
in recent years. For example, Amazon Web Communications has recently proposed
Services announced the launch of edge data a Draft Telecom Decree, an expansion of use of on-site renewable energy sources in the
centres in Hanoi and Ho Chi Minh City in its 2023 Telecom Law, which will enable pipeline. Meanwhile, innovative solutions like
August 2022. Chinese tech giant, Alibaba, direct foreign investment and 100% foreign undersea and floating data centres are being
also announced a plan to build its own ownership for the provision of data centre explored to mitigate these issues as well.
data centre to align with local regulations services, over-the-top services, and cloud Looking forward, we also expect a dynamic
mandating data storage within the country. computing. The 2023 Telecom Law is shift in the region’s data centre landscape.
While specifics such as cost and timeline set to take effect from 1 July 2024, and The room for expansion in developed
remain undisclosed, the company is policymakers expect the Draft Decree to markets may be limited with higher levels
expecting to invest more than US$1 billion be finalised and issued on the same day. of compliance and costs which are rapidly
in this project, reflecting its confidence in We expect a substantial influx of capital rising. Countries like Malaysia, Indonesia,
the Vietnamese market. to be directed to the Vietnam market once and Vietnam are pivotal to the region’s
At the moment, foreign entities are there is more clarity on related policies growth momentum, each embracing digital
required to forge a commercial agreement and regulations. According to a report ambitions and witnessing burgeoning
with a Vietnamese telecom entity to offer by Research and Markets, Vietnam’s data data centre development. These emerging
data centre services within the country. centres market was valued at US$685 million markets will help the region become a digital
However, this scenario may soon change. in 2023 and is expected to reach a worth of powerhouse over the next decade.

For more information about this report, please contact us

Industrial & Logistics Research

Jack Harkness Simon Smith Nancy Wong
Director, Regional Industrial Regional Head of Research Senior Manager, Regional
& Logistics Services, Asia & Consultancy, Asia Pacific Research & Consultancy
+65 6836 6888 +852 2842 4573 +852 2842 4281
[email protected] [email protected] [email protected]

Troy Griffiths Tommy H. Bastamy Kean-Hwa Fong

Deputy Managing Director Senior Director, Research & Director, Research &
Vietnam Consultancy, Indonesia Consultancy, Malaysia
+84 28 7309 1868 +62 21 293 293 80 +603 2092 5955
[email protected] [email protected] [email protected]

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