Demand for data centres across Asia Pacific continues. Image: Canva
  • A new Knight Frank report reveals consistent demand for data centres across Asia Pacific region
  • Mumbai and Bangkok experienced massive growth
  • Data centres are becoming a more attractive option for property investors

Knight Frank has released a new report, published in partnership with DC Byte, providing a detailed overview of the data centre landscape in the Asia Pacific.

Much focus was placed on the established markets of Tokyo, Shangai, Sydney, Singapore, Hong Kong and the fast growing tier 2 markets of Mumbai, Seoul, Kuala Lumpur and Bangkok.

Knight Frank Chief Economist Ben Burston says, “Amidst higher inflation and a subdued economic outlook, property investors are seeking diversification into sectors aligned with behavioral and demographic shifts that will provide secure income in the near term and maximise longer term growth potential.”

“Data centres clearly offer these characteristics, as the sector has witnessed a remarkable acceleration in recent years, driven by the exponential growth of internet usage across commerce, social media, entertainment, and cloud adoption.”

Positive trajectory in Asia Pacific

The report revealed a positive trajectory of a 425 megawatt (MW) increase from last year in the Asia Pacific Region, a result of both established and hyper-growth data centre markets continuing the momentum of the previous four quarters.

A huge portion of this growth was due to market expansions recorded in Mumbai and new capacity announcements in Bangkok, Kuala Lumpur and Tokyo.

Tier 2 markets surging

Mumbai experienced the most growth of Q1 2023, with the market’s total capacity expansion surpassing the 2,000MW milestone.

Bangkok also experienced impressive growth, with market players actively expanding their presence and increasing their share of the market by capitalising on advantageous market conditions.

Data centres in Australia

Knight Frank Partner and Head of Alternatives in Australia Tim Holstbaum says a wide range of investors are looking at data centres in Australia as an alternative asset class.

“As data centres gain prominence as an asset class, investors are leveraging various strategies such as mergers and acquisitions, joint ventures, and land acquisitions to tap into this thriving sector.”

He added that despite an increase in supply in recent years, demand remains strong in Sydney.

“Particularly from owner occupiers seeking to develop assets in key locations around Sydney such as Macquarie Park and Eastern Creek.”

According to the report, in Q1 2023, Sydney’s total capacity was 1,746MW, with a live capacity of 632MW, under construction capacity of 100MW and committed capacity of 387MW.

IT power for each market

Source: Knight Frank

Healthy growth predicted to continue

Holtsbaum says increased mergers and acquisitions in tier 2 cities are to be expected, as is a growing emphasis on data residency and sovereignty, supply chain disruptions and delays, and a heightened focus on sustainability in data centre development.

“Data centres encompass more than just physical infrastructure; these projects require expertise in areas such as real estate and digital infrastructure,” he said.

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