APAC Data Centre Demand to Double Within 5 Years Says Knight Frank

Demand for data centres in Asia Pacific is set to nearly double to 5,880 megawatts in the next three to five years, with a further 2,838MW already under construction or in development, according to Knight Frank.

Ten APAC markets were surveyed for the London-based agency’s latest data centre report, produced in collaboration with information service provider DC Byte. Across those markets, total live capacity stands at 3,042MW after 713MW of supply was added in 2020.

“Asia-Pacific’s appetite for data is only set to grow with the roll-out of more 5G networks across the region, an increasingly connected digital population, as well as increased adoption of remote working arrangements,” said Christine Li, head of research for Asia-Pacific at Knight Frank. “As such, most markets in Asia Pacific are supply constrained, resulting in more land owners and developers redeveloping vacant or aged industrial properties to higher-tiered data centres to ride on the next wave of growth.”

The consultancy has launched its study of the server facility sector, as some of the region’s largest institutions have been backing data centre projects with the growth of mobile data usage and corporate use of cloud services promising to provide rich returns from the tech-linked market segment.

Regionwide Growth

The survey covered established data centre hubs Singapore, Hong Kong, Mumbai, Sydney, Seoul and Tokyo, as well as the fast-growing destinations of Hanoi, Bangkok, Shanghai and Kuala Lumpur. Knight Frank highlighted Shanghai (1,058MW) and Tokyo (1,008MW) for reaching “gigawatt market” status last year — putting them in the same league as leading European markets like Frankfurt, London, Amsterdam and Dublin.

Knight Frank said total capacity rose in all APAC markets in 2020, reaching 733MW in Singapore, 691MW in Mumbai, 663MW in Hong Kong and 648MW in Sydney. The report singled out Mumbai’s growth trajectory as indicative of strong demand on the Indian subcontinent, with activity underpinned by the managed service provider and systems integrator sectors.

Third-tier markets Seoul and Kuala Lumpur have reached total capacity of 306MW and 135MW, respectively. Seoul’s data centre market is almost exclusively served by domestic colocation operators and telecom companies, but Knight Frank expects this to change as South Korea increasingly draws the interest of US hyperscale companies. Kuala Lumpur, meanwhile, is a smaller but fast-growing market and has strong links with Singapore and Japan.

Two emerging data centre markets, Bangkok and Hanoi, are viewed as having high growth potential because of their increasing economic firepower and large, technologically engaged populations. Together the two markets account for 113MW of capacity in the region.

APG, CITIC Back Data Centres

Knight Frank’s findings on data centres confirm trends evident in the market in recent months as some of the region’s largest investors look for opportunities to profit from developing facilities to meet cloud-driven demand.

APG this past week announced that it had spent an undisclosed amount to acquire a 20 percent stake in Greater China data centre developer and operator OneAsia. That deal came after the Dutch pension fund manager had purchased 10.43 percent of mainland data centre operator Chindata before its initial public offering on the NASDAQ exchange last year. By January of this year, the Dutch institution had boosted its stake in Beijing-based Chindata to more than 19 percent.

Also last week, Singapore-based data centre startup Princeton Digital Group revealed that it had won a $230 million refinancing package from Shenzhen’s China Merchants Bank.

On Monday, Microsoft, which now offers cloud services through its Azure unit and its consumer-targeted OneDrive, said it would invest $1 billion over the next five years in digital initiatives in Malaysia, including setting up its first data centre in the country.

Team Boost

To help ride this wave of investor interest, Knight Frank strengthened its data centres offering last year with the hiring of Adeline Liew, the agency’s Singapore-based data centres lead for APAC, as it seeks to meet the needs of data centre developers and occupiers.

“This growing demand for data is heating up land values for data centre sites in emerging markets like Southeast Asia and India where developers are keen to partner with established data centre operators,” Liew said. “These operators are also keen to buy greenfield sites for development led by hyperscale initiatives.”

Liew works alongside the firm’s global co-heads of data centres, Ben Stirk and Stephen Beard, both formerly of CBRE and based in London.

The global team brokered deals for four data centre development sites in the past 12 months with a combined total of 240MW in London, Mumbai, Milan and Sydney, Knight Frank said.