APAC Co-Location Data Centre Pipeline Needs $116B in Funding: C&W

Asia Pacific’s co-location data centre pipeline will require more than $116 billion in funding for construction over the next five to seven years as demand for the sector grows, according to Cushman & Wakefield.

The pipeline, which excludes hyperscale projects, stands at 12,452 megawatts under construction or in late-stage planning, the consultancy said in its latest APAC Data Centre Market Update. Using the construction cost of a mid-specification data centre as a benchmark, the total capital required to build out the pipeline sits at $116.2 billion.

By Cushman & Wakefield’s estimates, the pipeline can generate more than $14.9 billion in annual co-location rent and achieve a nearly 13 percent yield-on-cost ratio for developers. The findings come after data centres made up a record-high 11 percent share of investment volume in APAC commercial real estate during 2024, the consultancy said, citing MSCI data.

“The investment potential of the sector has well and truly captured the attention of investors, as evidenced by the sector’s increasing share of annual real estate investment volumes,” the report’s author, APAC data centre research head Pritesh Swamy, said in a release.

Consolidation Likely

More than 80 percent of the 12.5-gigawatt pipeline is held in the five key markets of Japan, India, Australia, mainland China and Malaysia, according to Cushman & Wakefield.

At the city level, Tokyo has the biggest pipeline at 1,656MW, followed by Mumbai (1,143MW), Johor (1,049MW), Sydney (783MW) and Beijing (613 MW). In these cities, gross yield on cost rises to 14 percent, the consultancy said.

“We have seen these investments rapidly evolve from smaller plays on, for example, a piece of land, to larger-scale deployments requiring consortiums that bring together a number of different positions,” said Gordon Marsden, head of capital markets for Asia Pacific at Cushman & Wakefield. “We do expect to see consolidation as the sector matures, but for now at least, the capital requirements mean the sector continues to attract vast capital at a faster rate than other asset classes” in commercial real estate.

In terms of capital requirements to complete the development pipeline, Japan leads with $35.4 billion needed for its 2,678MW of capacity, followed by India ($16.4 billion for 2,299MW), Australia ($15.5 billion for 1,610MW), mainland China ($13.4 billion for 1,891MW) and Malaysia ($11.6 billion for 1,319MW).

Southeast Asia Powers Up

For 2025, Cushman & Wakefield sees the highest growth in Southeast Asia as Indonesia, Malaysia and Thailand emerge as key regional hubs, supported by expanding digital economies and government incentives.

Malaysia’s powerhouse market of Johor, near Singapore, added 300MW of new capacity in 2024 — a 330 percent annual increase, according to the report. The momentum has continued this year with Singapore-based ST Telemedia Global Data Centres breaking ground last month on the first facility of its 120MW campus in Johor’s Iskandar Puteri.

STT GDC on Monday announced the start of construction on its third data centre in Bangkok, a market where operational data centre capacity grew from 59MW in December 2023 to 105MW at the end of last year, per Cushman & Wakefield.

The new data centre, known as STT Bangkok 2, has a development potential of 24MW and is expected to enter service by the fourth quarter of 2026, said Temasek-backed STT GDC.

The facility expands the STT Bangkok Data Centre Campus in the capital’s eastern outskirts from the operational 22MW at STT Bangkok 1. The group’s STT Bangkok 3, located within the One Bangkok mixed-use complex near the central business district, provides an additional 2MW.