Asia’s emerging markets are growing in importance for data centre providers as data consumption by the region’s growing population of young consumers, as well as increasing enterprise adoption of AI and cloud, fuel a surge in digital infrastructure requirements, Digital Realty managing director and head of Asia Pacific Serene Nah told Mingtiandi’s 2024 Data Centre Forum on Tuesday. Watch the full recording>>
In a spotlight interview at the Yardi-sponsored forum, Nah described Digital Realty’s entry into Southeast Asia’s emerging markets and expansion in India as a “priority” in 2025. The NYSE-listed data centre trust managed 300 megawatts of existing capacity in Asia Pacific as of 30 June, with the majority of those facilities located in developed markets including Japan, Korea, Singapore, Hong Kong, and Australia.
“One of the things we’ve done is starting to work more in the emerging markets,” said Nah. “We continue to look at new opportunities in India given the growing demand in that market. In the emerging market pool – we’re in one of the largest growth markets in the world for data centres – we continue to look at Southeast Asia and there are a lot of things at work right now in Southeast Asia being relevant to customers, and a huge secular trend in favour of data centres and data needs.”
Austin-based Digital Realty unveiled its inaugural project in India earlier this year with the launch of the first phase of a 100MW campus under its Digital Connexion joint venture with Canadian investment giant Brookfield and Jio Platforms, the telecom unit of Indian conglomerate Reliance Industries, with the JV also currently developing a campus in Mumbai.
Enterprise and Consumer Demand
Southeast Asia’s data centre market is still at an early stage of growth as enterprises begin to embrace AI at the same time that cloud and hybrid cloud adoption remains under-penetrated compared to developed markets, with deployment of those technologies bolstered by state initiatives to promote digitalisation, according to Nah.
Serene Nah, managing director and head of Asia Pacific at Digital Realty
“(The evolution and growth) of cloud and hybrid cloud, and some of the transformation activities that the governments are doing in this region, I think there’s a lot more to come in enabling a digitisation of the environment that would also fuel the use of more data and therefore the need for more data centres,” said Nah. “And then you couple that with enterprises embracing more digital transformation, be it cloud or AI…I just see this as tremendous growth, and I think we’re just in the very early innings in Southeast Asia.”
Digital Realty’s tenants are committing to new space as early as the pre-development phase, as enterprises and hyperscalers anticipate large capacity requirements on the back of expanding AI and cloud deployment, according to Nah.
“We’re starting to see more sizable cloud deployments and AI oriented requirements that can be from both enterprises and also larger hyperscalers,” said Nah. “Many of those are in new buildings that are either under construction or are in the pre-development phase. They are trying to put in the order early because they know that you have this development in the build and they already know that they want this footprint, so they would rather lock it up.”
In addition to demand from enterprises and hyperscalers, Nah also sees data centre demand being bolstered by increasing data consumption in the region, with Southeast Asia’s large young population having leapfrogged other markets in mobile phone adoption.
JV Partners Are Key
With Digital Realty expanding into Asia’s emerging markets, Nah pointed to the company’s strategy of bringing on local joint venture partners to tap their expertise in those markets, in addition to providing capital backing.
The trust’s India JV, which was originally established in 2021 as a 50:50 venture with Brookfield, brought in Reliance Industries’ Jio as a third partner in 2023, with the partnership having since been rebranded as Digital Connexion. In Japan, Digital Realty has a 50:50 JV with Mitsubishi Corporation, with that partnership having commenced construction in May of a third data centre at its NRT campus in Chiba prefecture near Tokyo, just days after opening a 34MW facility on the same campus.
“In APAC we also have JV partners, and we look at them not just as financial partners, but also as operational and strategic partners that enable us to enter the market, understand the local know-how, and bring a lot of the value-add in local markets to enable the entry to market, the builds, and the subsequent leasing to be more advantageous,” said Nah. “Just like what we’ve done in Japan with a very successful joint venture with Mitsubishi and a three-party joint venture in India with Brookfield and Reliance, we’ll be looking to do more of that as well.”
Outside of Asia Pacific, Digital Realty has joint ventures in the US with private equity firms TPG and GI Partners and NYSE-listed REIT Realty Income, as well as a $7 billion hyperscale development JV with Blackstone in the US and Europe.
Mingtiandi’s 2024 Data Centre Forum concludes on Thursday, 17 October with a panel focused on the Japan and Korea markets featuring Diarmid Massey, CEO of data centres for ESR; Phillipa Weber, director of business development for internet data centres at Gaw Capital Partners; and Jingwen Ong, APAC research manager at research provider DC Byte.
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