Ho Chi Minh City is one of the top markets for developing data centers in terms of land costs, according to experts.
According to the annual report by Cushman & Wakefield, only Ho Chi Minh City comes in the top 10 for the land price category, despite several of the biggest markets in the APAC region having particularly high land costs.
The rest of the top ten markets in the category are: Columbus, Santiago, Johannesburg, Atlanta, Nashville, Phoenix, Austin, Denver, and Chicago.
In order to identify the top overall markets as well as the top performing markets in each category, the research rates the key data center markets throughout the world according to 13 weighted categories, including market size, fiber connectivity, power cost, and environmental risk.
The average rental price each lease cycle in Ho Chi Minh City, according to the company’s most recent fourth quarter 2022 market beat report, reached 159 USD per sq.m., an increase of 3% from quarter to quarter and 10% from year to year.
Although Vietnam may now be a developing market for data centers, there are many fundamentals that indicate considerable potential for growth in the future. With 30% of the population still not using the internet, the country currently boasts a 70% internet penetration rate.
The center of Ho Chi Minh City houses more than 48% of Vietnam’s capacity. Currently, only a few global corporations need high-level capacity.
Partnering with local telecommunications providers is a popular strategy for international carriers. With regard to the size of the market and the demand for internet services, there is a significant paucity of existing infrastructure. At the level of infrastructure development and content provision, this presents a significant potential.
According to Cush & Walkfield, due to latency issues and the availability of manpower, areas south of Ho Chi Minh City are considered as a hub for data centers, particularly for cloud services platform providers. In August of last year, CMC Telecom inaugurated the Tan Thuan Data Center. The building was created by Singaporean firm B-Barcelona. According to CMC, the facility has a 13,133 sq. m. total area and was 30% pre-leased at launch.
With the implementation of their first data center, EC51, in Vietnam in Ho Chi Minh City in partnership with the Vietnam National University, Australian edge data centers company Edge Centres has expanded into Asia. In Ho Chi Minh City, they also have plans for another edge location.
Greenfield land was purchased by GAW Capital in the city’s Sai Gon Hi-Tech Park. The data center should have a capacity of 20MW and be larger than 18,000 square meters.
Moreover, a new data center will be built by Viettel, a Vietnamese telecommunications company, with an expenditure of USD 260 million. Although the facility’s features have not yet been revealed, this would be Viettel’s third project in the city.
Over the past year, site competition has intensified between players in the data center industry and other asset classes. Similar locations for data centers have been under consideration for fulfillment centers and large-scale single-family rental complexes.
The company claims that a significant advantage that data centers have over other potential sites is the minimal influence they have on nearby traffic and parking, two issues that are very important to many local communities.
Data centers do, however, demand more electricity, and the local population has become more concerned about the potential impact on electrical grids. As workloads are optimized for latency, edge data centers have continued to expand.
