The data center inventory in the Asia-Pacific region is experiencing strong growth, particularly in Singapore, Tokyo and Sydney where each location now boasts over half a gigawatt (GW) of live power capacity.
According to CBRE’s Global Data Center Trends 2023, the strong demand is seen through the decline in vacancy rates. Singapore, which is the world’s most power-constrained data center market, has less than 4MW of available capacity and a record low vacancy rate of less than 2%. In Tokyo and Hong Kong, vacancy rates have witnessed a substantial decline of 1.5% year-over-year, now standing at 2%.
Colocation rental rates remain strong in Asia-Pacific with Singapore being one of the most expensive markets in the world at over US$300 per kW. The region’s data center availability continues to thrive, and according to CBRE’s projections, this sustained demand is set to draw operators into expanding their capacity. This will provide ample colocation availability, catering to the needs of cloud service providers and enterprises alike.
There is a strong demand for local cloud based services in Tokyo driving the growth for data center capacity. Tokyo remains a key market for data centers in Asia-Pacific. There will be continued demand in the country as new inventory is projected to expand by around 30% by 2025.
In Hong Kong, geopolitical tension has caused some of the global players to look elsewhere for the establishment or expansion of data centers.
Sydney continues to garner interest from global cloud service providers, operators and investors. Gaming, content streaming, industrial IoT applications and AI are expected to drive the growth of data centers.
India is seen as a strong emerging market propelled by the presence of thriving financial services companies, a well-established ecosystem of fiber connectivity and strong government support. Some of the international players with development plans in the country include Blackstone, Brookfield-Digital Realty and Princeton Digital Group.
South Korea is a growing market with development underway by major operators that include Actis, Digital Edge, SC Zeus, STT GDC and Stack Infrastructure. The key areas for data center development in greater South Korea are the regions of Gyeonggi and Incheon.
However, this rapid expansion is also presenting a new challenge for operators in certain Asia-Pacific markets, which is the availability of sufficient power to meet the increasing demand.
Limited power supply and high sustainability requirements are reasons for Singapore’s inventory to remain tight and colocation prices to remain high. This has led to the spillover to locations such as Johor in Malaysia.