Property services firm Colliers Philippines has released a market forecast report on the Philippine data centre market predicting strong prospects and growth opportunities for the industry.
Colliers predicted that data centre investments in the Philippines would double to exceed P35 billion in five years, and forecast a 13.4% annual increase in industry investments from 2022 to 2027.
Colliers’ Director for Capital Markets & Investment Services Paul Chua observed that “the Philippines is considered one of the largest early adopters of digital technology, be it for social media, e-commerce, education, and financial services. With the large tracts of data needed to effectively optimize the exchange of information, the Philippines is now being touted as the next viable destination for data centre operations.”
Stepping Up Digital Transformation Across the Philippines
In 2021, investments in the Philippines’ data centre industry reached 298 million USD. Furthermore, while Metro Manila is still the primary data centre hub in the Philippines, data centre operators have been expanding into other provinces, such as Cavite, Cebu, and Davao.
Chua added that strong demand for data centre services in the Philippines would continue to be bolstered by the rise of e-commerce transactions, government initiatives for smart cities, and proliferation of cloud computing technology.
Notably, the Colliers report highlighted that the Philippines has 76 million Internet users spending an average of 10.5 hours a day online, and e-commerce transactions in the Philippines are projected to grow to PHP 495.2 billion (9.5 billion USD) by 2025. Businesses in the Philippines have embraced digitisation of their operations over the past two years, boosting demand for and investment in data centres.
Colliers also discussed key challenges data centre operators would face in the data centre market, and provided recommendations for data centre operators to navigate these challenges.
For instance, relatively slow Internet broadband speed and relatively high costs of electricity in the Philippines (especially when compared with other Southeast Asian countries) hinder the Philippines’ development as a well-connected data centre hub. In addition, limited land supply area and lack of suitable data centre infrastructure also create supply-related constraints and increase costs of redeveloping existing warehouses and properties into data centre facilities.
As such, Colliers recommended that data centre operators should base their facilities within existing industrial parks, which are already built with redundancy in mind and have proximity to data centre providers, supporting data centre uptime. In addition, data centre operators could partner with local firms in joint venture agreements to better integrate their data centre operations with the domestic market, and take advantage of strategic government incentives and fiscal benefits for the data centre industry.
Regardless of the challenges data centre operators may face in the Philippines, they should nonetheless continue to scale up and bolster their investments and operations in the country. Not only will demand for data centre services continue to grow in tandem with the country’s digital transformation, supply-side constraints can also be managed and ameliorated, especially with government support for the industry.
“Outstanding Data Center Projects” is an awards category for this year’s W.Media Asia-Pacific Cloud & Datacenter Awards. Thinking of nominating or sponsoring? Visit our Awards Page for more information. Nominations are open until 31st July.
