Countries Driving Growth in Data Center Penetration in Asia-Pacific Region

Countries Driving Growth in Data Center Penetration in the Asia-Pacific Region

A recent report by Cushman & Wakefield has shed light on the evolving landscape of data centers in the Asia-Pacific region. The report highlights that Malaysia, Thailand, and Japan are poised to take the lead in enhancing per capita data center penetration rates from now until 2030. This transformation is largely attributed to a robust development pipeline in Malaysia, positioning it ahead of other markets in the region.

The Asia-Pacific Data Center Investment Status Report indicates that Malaysia's colocation data centers will optimize their operating capacity, reducing the per-megawatt population from over 60,000 to approximately 14,000 by 2030. Historically regarded as a secondary option to neighboring Singapore, Malaysia has emerged as an independent data center hub. This shift is fueled by the growing demand for AI and cloud services, particularly centered around Kuala Lumpur and Johor.

Figure 1: Projected Population per Megawatt in 2024 and 2030
Source: IMF, Cushman & Wakefield

In Thailand, the nascent data center market is expected to witness a significant reduction in the per-megawatt population from around 800,000 to roughly 220,000, which represents a 70% consolidation. This change is indicative of the country's existing capacity, which is only 89 megawatts—the lowest in the region. However, with announcements of hyperscaler investments in 2024, Thailand is beginning to attract more attention.

Japan ranks third globally for the pace of population optimization per megawatt. The report estimates that the number of people per megawatt will decrease from the current 94,000 to about 30,000 within the same timeframe. This efficient scaling is attributed to Japan's standing as a major investment destination due to its stable political environment, affluent population, and the fourth largest GDP in the world.

Preethesh Swamy, the author of the report and Head of Insights and Analytics for Cushman & Wakefield's Asia-Pacific Data Center Group, commented on the prevailing infrastructure challenges:
"In most markets within the Asia-Pacific region, the development of data center infrastructure has been significantly lagging, with an average population exceeding 350,000 per megawatt. In contrast, the United States sees a ratio of just around 30,000 per megawatt. This discrepancy indicates ongoing infrastructure expansion efforts to meet the rising demand driven by economic and population growth across several markets."

The report also analyzes other key indicators fueling investment activities in the region, including projected rental income, cost-to-return ratios, capital expenditure (CapEx) requirements, and GDP growth rates. Swamy further remarked:
"The growth of this sector is closely linked to economic maturity. Regions with economies exceeding $1 trillion in GDP are anticipated to remain primary growth hubs in the next three to five years."

About the Asia-Pacific Data Center Investment Environment Report

The report focuses on 14 data center markets within the APAC region, presenting key market indicators that drive capital markets and investment trends in high-growth sectors. Some of these vital indicators include:

- Population per megawatt
- GDP growth and regional demand
- Direct investment from the United States into the Asia-Pacific
- Capital expenditure requirements
- Estimates of rental income and cap rates
- Yield against costs

For more information, you can download the Asia-Pacific Data Center Investment Status Report from the Cushman & Wakefield website, where you can also access additional press releases regarding this report.

About Cushman & Wakefield

Cushman & Wakefield is a leading global commercial real estate services firm listed on the New York Stock Exchange. The company operates in approximately 60 countries with around 52,000 employees. In 2022, Cushman & Wakefield reported revenues of $10.1 billion across core services such as facility management, sales brokerage, valuations, tenant representation, leasing, and project management. They are known for their award-winning corporate culture and commitment to diversity, equity & inclusion (DEI) as well as Environmental, Social, and Governance (ESG) initiatives. For more details, please visit their official website at www.cushmanwakefield.com or follow them on Twitter at @CushWake.