The Asia Pacific data centre market is expected to overtake North America to become the largest in the world by 2021, according to property services consultancy Cushman and Wakefield.
Underpinned by a surge in demand for cloud services and digitisation, the total market size for Asia Pacific is predicted to be $28 billion by 2024, 20 percent more than the $23.4 billion forecast for North America, which currently dominates the world’s supply of server shelter.
With compounded annual growth expected to expand by an average of 12 percent each year over the same five year period, Asia Pacific is expected to be the second-fastest growing region globally, based on the property services company’s analysis of data from Structure Research.
If measured separately from the rest of Asia Pacific, Southeast Asia is set to become the fastest growing region for co-location data centres in the world over the next five years, with its market size expanding at a compounded annual rate of 13 percent between 2019 and 2024.
Singapore Leads APAC
Singapore, which is currently Southeast Asia’s only mature data centre market, ranked as the third most robust data centre market in the world behind Iceland and Norway, according to Cushman and Wakefield’s Data Centre Competitive index.
Based on a range of factors including economic and political stability, ease of doing business, and corporate tax rate, Singapore scores tops in Asia Pacific, followed by Hong Kong, South Korea, Malaysia and Australia. China is sixth, Japan eighth, and India tenth.
Across the 38 countries measured globally, the US is ranked seventh, while Hong Kong is ninth, ahead of the UK in the tenth spot.
The property services consultancy said that the competitiveness of Singapore’s data centre market was underlined last year when Facebook selected the city-state as the site of its first billion-dollar facility in Asia.
The social network’s 11-storey, 170,000 square metre translucent facility, due to open in 2022, will be located in the city’s Jurong East industrial district.
Equinix, Digital Realty and ST Telemedia have also purchased land for data centre development from Singapore’s Jurong Town Corporation, according to Cushman and Wakefield.
Indonesia and Vietnam to Drive Southeast Asia Growth
Within Southeast Asia, Indonesia is expected to become the fastest growing market for data centres, with the supply of data facilities projected to expand at a rate of 22 percent per annum over the next five years. Google’s decision last year to establish the archipelago nation as a new region for its global cloud services division demonstrates a developing interest among data services providers to choose Indonesia as an alternative to Singapore, according to the property consultancy.
“Demand for data storage across Southeast Asia holds tremendous potential for data centre players,” said Cushman and Wakefield’s director of leasing in Singapore, Lynus Pook, while adding that well-located data centres built with redundancies to ensure zero downtime will be in short supply and in high demand.
“Until the levels of infrastructure in the emerging markets of Thailand, Indonesia and Vietnam are sophisticated enough to support the smooth operation of data centres in these markets, data centre players will continue to leverage the twin strengths of Singapore and the emerging markets of Southeast Asia to navigate the next wave of data centre development,” said Christine Li, Head of Research for Southeast Asia said.
The adoption of 5G, which is expected to unlock new capabilities in markets such as self-driving cars, cloud gaming and smart appliances, is expected to accelerate growth in demand for cloud services and data centre capacity, according to the report.
Thailand and Malaysia are also pushing data centre investments as they strive to establish the infrastructure necessary to attract data centre developers and operators.
“As a whole, Southeast Asia as a region offers many advantages for data centre players with a longer-term view,” said Li, adding that the investment potential of data centres in Southeast Asia far outweighs the teething issues.