Johor data center market is almost fully taken up in the first half of 2025 with a vacancy rate of just 1.1 per cent, Knight Frank reveals in its latest report on the data center market in Asia Pacific. The southern state of Malaysia recorded 260.0MW of take-up, with social media accounting for 61 per cent and the remainder driven by AI demand.
“The market is now highly constrained, with a vacancy rate of just 1.1%, as planning becomes more challenging and power shortages coming through,” the report said, adding that Johor is emerging as the top alternative to Singapore due to its proximity and strong connectivity. Singapore’s data center market is highly constrained due to its strict planning controls where only a limited amount of new capacity is allowed. This has pushed global tech firms and data centre operators to look across the border to Johor and Batam, with Johor taking in the bulk of the overflow demand.
The state has become the fastest-growing data center hub in Southeast Asia, with aggregate supply nearly doubling over the past 12 months to 5.8GW in Q2 2025, including 2.0GW of new project announcements.
Despite an increase in electricity rates which could see operational costs rising by l0-14 per cent, and chip export restrictions in Q3, it appears that “all regional operators are still looking to enter the market”, according to Knight Frank. “Land parcels in major tech parks are now scarce and the next phases of these parks are already being booked. Developers from other regions and sectors are also entering the market,” the report stated.
Among the leading players are Bridge Data Centres (BDC) and DayOne, which collectively manage 58 per cent of the market’s built IT capacity, as well as 41 per cent of capacity under construction. Both leverage on Chinese supply chains hence can build faster at a lower cost to accommodate demand for quick move-ins by Chinese customers. Build times have fallen to 9 -11 months with increased use of pre-fabricated materials and systems.
But the biggest future pipeline for both committed and early-stage projects comes from Microsoft which will have a potential 600MW if fully built out. In Q1, Microsoft had acquired a six million sq ft site for US$147 million. ZData followed suit with the purchase of a 1.7 million sq ft piece of land for US$55.9 million.
Other major happenings in 1H 2025 include AirTrunk’s 270MW second facility and BDC’s 400MW power agreement at MY07, as well as new entrants such as CURRENC Group and Stack Infrastructure.