Southeast Asia has overtaken Northeast Asia and Australia/New Zealand in both capacity growth and pipeline expansion, having recorded significantly higher compound growth rates over the past three years, according to market research firm DC Byte’s latest blog yesterday.
Factors responsible for this included land availability, improving infrastructure, and more permissive policy environments. This has led to Malaysia, Indonesia, and Thailand becoming core components of regional deployment strategies, particularly for large-scale and AI-ready capacity, while Singapore acts as a control tower.
Although no longer a growth engine, the Lion City remains critical to regional connectivity, financial services, and high-value workloads. However, large-scale expansion has shifted to its neighbours due to land, power and water constraints, as well as more stringent sustainability requirements.
This, the blog said, has accelerated multi-market deployment strategies across Southeast Asia, and resulted in a more distributed regional model, with clearer separation between control, compute, and scale.
Growth in the region has now entered a new phase where even as demand continues to rise, power availability, policy frameworks, and AI-driven workloads are now shaping the outcomes. Mature hubs are tightening controls, while emerging markets are scaling faster, often leapfrogging traditional development models.
“What we are seeing across Asia Pacific is not a slowdown in demand, but a recalibration of how growth happens. Capacity is still coming, but it is increasingly shaped by power access, policy alignment, and execution certainty. Understanding those dynamics early is becoming a competitive advantage for every stakeholder in the market,” said James Murphy, Managing Director, APAC, DC Byte.
Growth is no longer defined by how much demand exists but by how effectively capacity can be delivered. Across Southeast Asia, pipelines are heavily weighted toward early-stage projects which introduces execution risk around power allocation, permitting, and timelines. Clear winners are markets that can move projects from pipeline to production the fastest.
In a clear divergence from traditional growth trends, the shift also saw some markets, most notably, Thailand, moving straight into campus-scale and hyperscale development without a long intermediary retail phase. Average project sizes in Thailand are increasing, especially in the Eastern Economic Corridor, and infrastructure is being planned with future density and expansion in mind.
This mirrors more mature regions like the US and Europe where early planning around power and land is becoming decisive. Additionally, site selection and leasing decisions are also being decided earlier in the development cycle due to increasing AI workloads. In several markets, AI represents a growing share of total demand, alongside sustained cloud expansion. As a result, the blog noted that markets that can support AI-ready infrastructure from day one are gaining momentum, while others risk falling behind despite strong demand signals.