It is becoming increasingly expensive to build and operate data centers in Asia, says a report by global professional services company Turner & Townsend. The report titled Data Center Cost Index 2023 analyses 46 global markets, and finds that Tokyo is the most expensive place to build data centres at US$13.7 per watt, followed by Zurich, Silicon Valley, New Jersey and Singapore. The research analyses data centre benchmarking costs from over 200 projects in over 20 countries, alongside insight from 246 industry experts.
As per a statement released by Turner & Townsend, “The more striking trend highlighted by the report is of rapid cost escalation. The average cost of data centre construction globally has risen by six percent over the last year, softening slightly from eight percent in 2022. By comparison, cost increases of between 11 and 22 percent have been seen in seven markets across Asia, Africa and Latin America globally.”
It further says, “The trend has been notable in south-east Asian markets. Jakarta (US$10.5 per watt) has risen to the seventh most expensive market globally for data centre construction, while Kuala Lumpur (US$10 per watt) has climbed to the 13th position in the rankings. The rapid digitalisation and economic growth in parts of Asia is creating new sources of opportunity in under-served markets.”
The report also finds an increase in costs in the Middle East where it says, “Riyadh in the Kingdom of Saudi Arabia (KSA) is a new entrant to the index with an average cost of US$10 per watt. The growth in this market is being driven by strong investment in digital connectivity and a growing range of giga-projects to support the government’s nation-building agenda.”
Reflecting on the subject of skills shortage, it says, “Soaring demand for data centres is being constrained by labour shortages – fuelling increased costs. 94 percent of survey respondents report skills shortages and 85 percent report ‘hot’ or ‘overheating’ conditions.”
The report also acknowledges that data centers are power guzzlers and that availability of power was a key decision driver. It says, “Nine in 10 (92 percent) of respondents to Turner & Townsend’s survey said that access to power is now more important for data centres than their geographical location. Data centres are inherently energy-hungry, and the scale of power needed will only increase with the impact of artificial intelligence (AI). 88 percent report demand for data centre capacity for AI is increasing rapidly.”
