Asia Pacific’s data centre market is worth US$12 billion, according to a recent PWC report, and it’s continuing to grow with the region’s financial centres of Hong Kong and Singapore leading the way.
“We expect the region’s data centre market to grow by 27 percent annually – exceeding its European counterpart in size by 2021,” says Paul Dwyer, Regional Data Center Lead for JLL in Asia Pacific. “A popular choice for companies to base their headquarters, Hong Kong and Singapore are currently attracting most interest with great demand for data centres from large corporate offices.”
Bob Tan, from JLL’s Alternatives team in Asia Pacific, agrees, saying that investors are increasingly turning to alternatives with data centres in Hong Kong and Singapore high on their radar. “Both are key mature markets and tend to have more investment opportunities given the amount of stock in the market.”
According to Dwyer Singapore holds a slight advantage over Hong Kong, as it is “set up quite well for the data centre market”, in terms of the availability of land, government support, and a stable geo-political climate. “Hong Kong is expensive and the buildings are not as suitable as Singapore. And Singapore has prioritised diversity of location and greenfield availability for data centres,” he says.
The data advantage
The rise and ubiquity of cloud computing in the region is driving the demand for data centres more than ever.
“Companies want more flexible solutions which ultimately all point towards Cloud. Cloud is driving every single market in Asia Pacific, changing the market place and creating new operations,” says Dwyer.
Rapid urbanisation and the Internet of Things will further push demand for data centres as businesses, cities and individuals themselves continue to voraciously consume data in the pursuit of new technologies such as driverless cars and sensors.
Moreover, e-commerce and social media have yet to come close to reaching their potential in Asia. “Everyday actions such as dialing into your social media applications are not yet the norm for many in the region, and the emerging markets have some serious growth ahead of them,” says Dwyer. “Indonesia—the poster child of the emerging markets and the third-highest Facebook market globally— is only at 40 percent capacity for social media and even less for things like e-commerce.”
It is, therefore, not surprising that secondary and emerging markets in Asia such as Thailand, Indonesia, India and Malaysia are on the fast track to improve their infrastructure in a bid to get in on the data centre action. Alibaba Cloud has announced plans to set up data centres in Jakarta and Mumbai and is debating locating another datacenter in Malaysia’s Cyberjaya. With modernization of its data centre facilities through a new cloud data centre, the Thai market has become increasingly relevant in recent times with the almost-completed site by global giant Supernap, located just outside of Bangkok, highlights opportunities outside of the primary markets.
“Investors are certainly paying attention to these trends, as this is a fast growing sector and there is tremendous demand,” says Tan. “There is now greater understanding and appreciation of data centres as an asset class compared to before.”