The Japan data center market is forecasted to experience steady growth at a CAGR of 5.93% during the 2022-2028 period.
The key reasons for the projected boom is due to Japan’s status as an economic powerhouse in the APAC region and a hub for global connectivity. The Northeast Asian country is seen as a leader in technology, robotics and machine learning, according to Arizton’s research. The high internet and social media penetration rate across Japan is driven by the deployment of 5G services, improved inland connectivity, availability of renewable energy and cooling solutions, making the country an attractive market for investors.
The Japan data center market is expected to attract investments worth US$ 11.44 billion in 2028 while the colocation market revenue is tipped to hit US$ 3.82 billion in the same year. It’s one of the biggest volume of investments that puts Japan among the top data center market in the APAC region, following China and Australia, according to Research and Markets.
Besides colocation operators, the country witnessed new investments from hyper-scaler Google. In October of 2022, Google stated that the new facility in Japan’s Chiba is part of a US$ 730 million investment in its local infrastructure that will extend through 2024. The Chiba data center will be Google’s third location in Asia, after Taiwan and Singapore.
The Japan data center market is primarily concentrated in the Tokyo and Osaka regions, that house over 70% of existing capacity. The capacity of data centers in greater Tokyo totaled 865 MW at the end of 2022, and is expected to reach 1,970 MW in three to five years, according to Cushman & Wakefield.
In preparation for large-scale natural disasters, Japan’s Ministry of Economy, Trade and Industry is planning to unveil guidelines to disperse data centers currently concentrated in Tokyo and Osaka to Hokkaido and Kyushu.
With the rapid development projected in Japan, there is a challenge in the spike in construction costs caused by a rise in interest rates and longer time frames for building new facilities stemming from labor shortage.